Noodle wheats vie for grower support

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Photo of wheat fields

InterGrain’s wheat breeding trials at Dandaragan, WA, have evaluated more than 3000 lines for their suitability for Udon and other noodles during the past two years.

PHOTO: InterGrain

Udon noodles represent a potential growth area for Australian wheat growers – but not before some production and marketing hurdles are cleared

The Japanese restaurant chain Hanamaru is on a mission to bring the classic Japanese udon noodle cuisine to the world. In little more than a decade, the company has opened 300 fast-food outlets in Japan and has now begun expanding into China.

Combined sales already exceed more than four million serves a month.

Udon noodles have been part of Japanese culture for more than 1000 years, and Hanamaru says they combine a sense of tradition with nutrition for an increasingly health-conscious marketplace. The noodles have almost no fat, are trans-fat-free and are an excellent source of carbohydrates.

Photo of Daehan Flour Mills Co general manager Yang-Jin Park and manager Sang-Won Yong

Daehan Flour Mills Co business department general manager Yang-Jin Park and manager Sang-Won Yong are concerned about quality changes in noodle wheat blends from Australia.

However, the company’s plans for further expansion rely, in part, on the continuing supply of quality Australian noodle wheat. Even without further growth in demand, Australia is struggling to meet existing demand from Japan and South Korea.

Australia, or more specifically Western Australia, has been producing quality wheats for udon and other noodles for more than 40 years. Users in both Japan and South Korea say there is no real alternative to the Australia noodle wheat. Even in Japan, which produces its own noodle wheat varieties, millers will – when there is no price difference – use the Australian product for its better performance over Japanese wheats.

Japan and South Korea typically buy about 1.6 million tonnes of specially blended Australian Premium White (APW) and Australian Noodle Wheat (ANW), worth almost $600 million a year. They are long-standing, regular customers who have a specific preference for Australian grain and who have been willing, up to a point, to pay premium prices to secure supplies.

However, in recent years premiums for noodle wheats, such as Calingiri, have not been enough to offset, for growers, the benefits of alternative wheat varieties, such as the higher-yielding hard wheat Mace, which made up more than half of WA plantings in 2013. This has contributed to reductions in noodle wheat planting in Australia from a high of about 30 per cent in 2004-05 to 10 to 11 per cent of plantings in 2013.

For the past three years, WA-based grain-trading company Plum Grove has been working with growers and buyers to try to secure ANW supplies. Chief operating officer Tony Smith says the company has established a private noodle-wheat pool, in conjunction with Japan’s largest trading conglomerate, Mitsui, and also operates a pool with CBH Group.

Mr Smith says the sale of ANW is accompanied by the sale of its APW blending partner. So the loss of the noodle market also hits APW sales.

Plum Grove held a series of information sessions with growers in WA in late 2013, which included noodle-making demonstrations by staff from Hanamaru restaurants who made udon noodles using flour produced from Australian grain, followed by a batch using flour sourced elsewhere.

“There was a distinct difference in the texture of the noodles produced from the proper flour,” Mr Smith says. “Hanamaru is a retail noodle house that is built around the quality of its noodles. So much so that they visit Australia every year around harvest time to see what the quality of the crop is like.

Graphic showing the 2013-2014 Australian noodle wheat blend exports by month, price per tonne and volume (tonnes) to Japan and Korea

Figure 1 2013-2014 Australian noodle wheat blend exports by month, price per tonne and volumes (tonnes).

Japan on average pays a premium over South Korea due to the timing of tenders and the higher portion of noodle wheat required in the blend ratio. Typically, the South Korean market purchases its noodle wheat earlier and for deferred shipment at more competitive prices. The Japanese Ministry of Agriculture, Forestry and Fisheries' (MAFF) weekly tender system has a relatively fixed timing structure that forces sellers to hold shipping slots open against their noodle wheat positions. This pushes the prices higher, to balance the risk of not being awarded the MAFF tender.

“However, there is no agronomic benefit for growers in noodle wheats at the moment. Most of the talk is about new hard-wheat varieties on the horizon, and once growers move on from a variety, such as Calingri, they generally don’t go back,” Mr Smith says.

He says one of the major issues for the noodle trade is the difficulty for individual buyers to send market signals to Australian growers.

Tender systems operate in both Japan and South Korea, but are more restrictive in Japan, where grain is bought on a weekly basis at the government-approved lowest tender price. It is then traded to millers at the same price, making it difficult to reward growers for quality or consistency of supply.

For those who buy outside the tender system in Japan, there is a tariff penalty of 55 yen (A$0.58) per kilogram.

Mr Smith says some customers are still sourcing older noodle varieties such as Arrino, which must be imported by container because so little is now grown.

The South Korean market is even more price sensitive than Japanese markets. This was demonstrated by its willingness to reduce the percentage of the more expensive ANW in the blend in years of short supply and higher prices.

Japan tries to maintain a 60:40 ANW–APW blend, whereas South Korea routinely accepts a 70:30 APW–ANW blend after it was forced to change from the 60:40 ratio during the 2010 drought in WA.

South Korea’s largest flour mill company, Daehan Flour Mills Co, buys between 260,000 and 290,000 tonnes of Australian wheat a year, making flour for fresh and instant fried noodles. This represents almost half of the company’s production.

General manager of Daehan’s business department Yang-Jin Park says changes to the noodle blend in response to affordability and supply shortages reduce the quality advantages that Australian noodle flours would otherwise have.

Compounding this is a change in the characteristics of the APW category, which comprises an increasing portion of the blend. The South Koreans have attributed this to the large quantities of the hard wheat MaceA falling into the APW category.

“The Australian wheat is getting harder, which is not good for us,” Mr Park says. “The advantage of Australian wheat over US wheat is high starch, high viscosity, high falling number and colour. But this advantage is getting less.”

Mr Park says that without the quality difference, the door opens to substitution with wheat from other sources.

New varieties

In Australia, Tress Walmsley, chief executive officer of grain-breeding company InterGrain, says sustaining the appropriate quality characteristics for noodle blends is the reason for creating the Australian Premium White Noodle (APWN) category. The category only applies in WA and restricts protein to between 10 and 11.5 per cent.

This category is designed to create a sub-segregation of selected varieties from APW that better suit udon noodle production. However, the classification has not yet received international endorsement, in terms of a commitment to buy from the APWN pool for noodle blends, rather than from the APW pool. Without this endorsement and a price signal to growers, it remains uncertain whether segregation for APWN will be available at bulk-handling facilities.

Ms Walmsley says InterGrain has accelerated its breeding and testing program to address the precarious position of noodle wheats in WA’s overall cropping mix. Two new varieties are on the way, one of which will be released later this year as an alternative to Arrino, with the possibility of a Calingiri replacement also being considered.

The short-season variety IGW6042 will be released in spring, for planting in 2015. InterGrain’s own trials and 2013 National Variety Trials show the agronomic performance of IGW6042 to be comparable with Mace. The new varieties have improved disease resistance compared with Calinigri.

Trading changes

More than five years after the deregulation of the Australian export market, regular buyers from Japan and South Korea have, for the most part, adjusted to the changed trading conditions.

For most this has involved undertaking their own research into Australian seasonal conditions and identifying new marketing structures and trading partnerships, such as that between Mitusi and Plum Grove. As well as running a private noodle wheat pool, Mitsui also has a 25 per cent stake in Plum Grove. The Australian Export Grains Innovation Centre (AEGIC) and the Grains Industry Association of Western Australia are working with Japanese and South Korean buyers to identify market opportunities and help with challenges facing the noodle-wheat industry. For the Japanese market these have been identified in the report Australian wheat to Japan: status, opportunities and outlook, released by AEGIC in April.

More information:

Laureta Wallace, AEGIC,
0457 589 703,;

08 9419 8000

AEGIC’s In the Loop newsletter can be viewed at: (subscribe by clicking 'Subscribe now’ on this web page)

*Ground Cover writer Catherine Norwood recently undertook a GRDC study tour to learn first-hand from traders and processors what shapes this market.


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GRDC Project Code GTA10785

Region National, Overseas, West