Grains industry stakeholders gathered in Melbourne in June to develop plans for retaining and growing Australia"s stake in the increasingly competitive global marketplace. The AWB national Pool Wheat Breeding forum and the GRdC Wheat Quality Research forum (together the AWB/GRdC industry forum) focused on strategies that would encourage breeders and growers to help by producing varieties that would give Australia an edge. After hearing from international users, sessions (some public, some closed) then focused on market outlooks, customer requirements, crop quality, classifications and quality research. Kellie Penfold was there for Ground Cover
AWB (International) has begun a communications campaign in which it is warning growers that they risk price declines of more than US$15 a tonne in the next five years if they fail to respond to the changing international market.
Launching the campaign at an AWB/ GRDC Industry Forum in June, AWB(I) general manager Sarah Scales said in the face of the new wave of aggressively priced wheat exports from competitors, Australia needed to shift the quality profile of its crop to capture more of the higher-value, differentiated markets.
In what is called its "Shaping The Future" strategy, AWB(I) will invest between $5 million and $10 million in fostering the breeding of more competitive varieties, developing premium markets and encouraging growers to play their part.
The strategy aims to:
"Australian wheat has established a reputation for high quality, but our competitors are working hard to close the gap," Ms Scales said. "We cannot afford to sit still, and we must be prepared to respond by further differentiating our wheat and pushing harder into high-quality and high-value markets.
"The fact is Australian wheat is under increasing pressure in the international market, both from traditional exporters who are improving their product and from the new front of low-priced, nontraditional exporters who are securing a long-term position in the market.
"Non-traditional exporters, particularly in the former Soviet Union and Black Sea region, have increased production steadily, and in recent years have accounted for as much as 40 per cent of world trade volumes.
"As well, producers in Europe and North America are being further subsidised to grow white wheat to target core Australian markets."
AWB Limited pool manager David Johnson told the forum that forecast production of Canadian white wheats in 2005 was more than double the 200,000 tonnes produced in 2003 and by 2008 would reach one million tonnes.
At the same time, exports from the Black Sea region would reach 23 million tonnes, capturing 22 per cent of world trade.
He explained that a tonne of Czech wheat is delivered to Indonesia for US$149/t, compared with Australian APW at $172/t. AWB normally extracts a premium of US$10/t over Black Sea origin wheat, but three years ago this was US$30/t. Dark Northern Spring Wheat is delivered into the Philippines for US$205/t with 14 per cent protein, while APH attracts US$191/t with 13 per cent protein.
"Therefore to earn comparable value, we need the right Australian product to compete with Dark Northern Spring Wheat," Mr Johnson said.
Ms Scales added: "We need to shift the quality profile of the Australian crop. For example, our hard wheat, such as APH and AH, needs to have stronger sponge and dough properties to suit the premium bread customers and to compete in new markets against Dark Northern Spring Wheat. Our soft wheat needs to be tailored to cater for the specific cake and pastry markets of Asia, and by improving the colour and texture of our existing noodle wheat we can protect the market we have developed for those products."
Ms Scales said the levers with which to retain value for the Australian wheat crop were varietal classification, receiving standards, segregation, binning and blending, price signals such as grower payments based on variety, protein, screenings and moisture, and improved market information.
GRDC Research Code AWB00005
For more information: Cindy Mills, AWB wheat product development manager, 03 9209 2128
The "Shaping the Future" strategy addresses the challenge Australia faces to provide wheat that can compete effectively in export markets.
The GRDC recognises this challenge and supports a whole-of-industry approach to meet the demands of a global wheat market. This will ultimately benefit growers whose returns are reduced when wheat produced falls outside delivery specifications.
Australia currently produces large quantities of hard grained wheat with a protein content of less than 10 per cent, which in 2003-04 exceeded three million tonnes in the western region alone. This type of wheat directly competes with grain produced by new, non-traditional exporting countries in the former Soviet Union and South Asia, in markets where price reigns over quality.
The GRDC"s strategy to address these issues includes developing better varieties to service the new high value markets in Asia, as well as supporting research into farming practices, which have a major impact on grain protein content and quality.
In addition the GRDC is looking at the potential of new grain products that can offer high value returns to growers.