It pays to find your niche by Bruce Cullen
GroundCover™ Issue: 11
When next you're in the city and see someone doing the rounds of the health food stores, pet stores and knocking on the doors of millers and bakers, chances are that that someone is a graingrower looking for a niche market or looking for opportunities to move into direct marketing.
Those excursions are now paying substantial dividends for the increasing minority of growers who have moved beyond the farm gate.
Members of the Lameroo Premium Wheat Marketing Association are earning premiums of 10-12 per cent above what they could expect from the pools, by selling high-protein wheat direct to a miller in Adelaide.
Lentil growers in Victoria, working with The Lentil Company, which is owned by graingrowers, are selling direct into high-value markets of Spain, Mauritius, and the United Kingdom. They are looking to displace imported lentils on domestic supermarket shelves by securing contracts with a major wholesaler.
The Wimmera Grain Company, by grading and packing Kabuli chickpeas, generated returns of $1,200 a tonne for graded chickpeas delivered to the port of Melbourne for last season's crop. With a return to normal seasons, the company is looking to still healthy returns of around $500 to $600 a tonne this year.
The Tatiara Softwheat Growers Association of SA is generating a premium for its members for a product that was once being docked under the regulated domestic market.
Durum growers in New South Wales and Queensland are looking to a good season, with production in these area expected to come in at between 110,000 and 130,000 tonnes, with prices round $210 a tonne delivered at the depots.
And from the other side, Noodles Australia, the Japanese-owned company established in Western Australia some two-and-a-half years ago, is looking to buy wheat directly from growers so it can supply frozen Japanese Udon noodles to its expanding markets in Japan, Asia and North America. Noodles Australia is also looking for graingrowers who can supply biodynamic wheat for the noodle trade.
However, Phil Holmes, the Managing Director of the Queensland-based grain marketing consultancy and broker, Farmarco, reminds growers that the grain market is highly volatile and, growers have to conduct their own riskreward analysis before deciding to move into new ventures. That is why, he says, many growers are concentrating on meeting the increasingly tight specifications demanded when selling through the more traditional marketing structures.
While the rewards are there, the growers involved in establishing the above-named operations stress that success hasn't come without a lot of hard work and worry.
They all operate in different sectors of the grain market but there is a remarkable similarity between the factors which underpin their success. They also have in common a desire to exercise greater control over their products and have been driven by a' desire "to do more to earn more", in the words of one.
The factors which link these innovators are trust, quality and research.
For many, the first step involves gaining firsthand experience of the domestic market requirements. This is done by visiting the outlets and processors mentioned earlier and establishing sound relationships, based on trust and openness, with their purchasers.
The benefits cut both ways. It gives the growers a chance to learn exactly what the market requires. Jim Byrne, President of the Lameroo association, says he had little concept of what the mills required until he and other members of the association actually visited the mill and followed the grain through the processing chain. Today the mill owner regularly visits the region to discuss the progress of the crop and explain his requirements.
They have even taken this a step further. The Lameroo association, with funding from the Grains Research and Development Corporation, is conducting its own field trials to determine which varieties can better meet market demands.
Links benefit markets as well
The benefit for the purchasers and marketers in establishing closer links with growers are to give them direct access to information on the status of the crop.
The quality part of the equation rests on the growers' ability consistently to meet tight market specifications.