Supply-chain challenge as global demand climbs (Part 1)
Australia’s grain production will need to almost double over the next 40 years to maintain market share, according to one of the country’s major grain traders and marketers.
GrainCorp CEO Alison Watkins says this challenging outlook stems simply from projections that the amount of grain traded on world markets will double between now and 2050 to meet rising demand from countries that are either unable to be self-sufficient or that do not grow grain at all.
This is supported by recent figures from the International Grains Council, which has calculated global trade will need to increase at a rate of two per cent a year (production permitting) to cater for increasing demand from both established and emerging markets in the Middle East, Asia and Africa.
Ms Watkins says the critical issue for Australia is that production in countries such as Ukraine and Kazakhstan can be increased by opening up new farmland. For Australia to hold its place in the market, local production needs to lift from the current 35 to 40 million tonnes to about 60 million tonnes a year – without access to new land.
“It is a massive increase, which we most likely will need to find through a corresponding increase in yields, particularly for cereals and canola,” Ms Watkins says.
“For wheat, our major crop, it means finding a way to push yields from an average of 1.9 tonnes a hectare to 2.9t/ha. This is a huge challenge at a time when yields have been plateauing, but if we want to maintain our share of global trade, it has to be done.”
Ms Watkins says the global outlook means the much-touted opportunities for Australian grain are real, but they hinge on science and innovation that increase production on the growers’ side of the farmgate, and on her side help to drive an increasingly efficient and competitive supply chain.
Ms Watkins, who also runs a mixed-cropping and beef property in western Victoria with her husband, Rod, acknowledges that such ‘big picture’ scenarios can be hard to envisage at the level of the individual farm.
“As a country, the opportunity for grain is tremendous. The difficulty is translating this into the realities facing the individual grower who is seeing prices not keeping up with input costs; who is often wondering how simply to keep making a living from growing grain. It probably means quite a bit of consolidation to still take place for enterprises to be able to manage the margin pressure and risks such as climate variability.”
Related Feature: Supply-chain challenge as global demand climbs (Part 2)
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Region National, Overseas