Grains future: steady and upward

Australian graingrowers can approach the next few years with optimism. The outlook is for steady world prices and fast-growing markets in developing countries, especially in Asia.

There are good opportunities for Australian growers to benefit, providing they can remain competitive.

These were some of the messages from ABARE Chief Commodity Analyst Terry Sheales during a discussion of projections for the period to 2005-06 presented at Grains Week 2001 in Sydney.

Dr Sheales said the price recovery that began in 2000-01 was forecast to continue in 2001-02. The world indicator price for w heat (US hard red winter fob Gulf) was forecast to average around $US135 a tonne in 2001-02 — an increase of $US6 on the previous year.

Slight increases were forecast for prices of soybean and canola. World wheat stocks were expected to fall to their lowest since 1981-82: lower stocks held by the exporting countries meant that a reduced volume would be readily available for world trade.

Overseas subsidies

Dr Sheales said agricultural assistance by US and European Union governments continued to insulate farmers from world markets. Government support for US producers was provisionally estimated to have increased from 38 to 46 per cent of gross income between 1998 and 1999, and from 56 to 58 per cent in the European Union. By contrast, Australian wheat growers received only 11 per cent of their gross income from government, mainly in R&D contributions and relief.

However, proposed policy changes in the European Union, the US and China over the next few years had the potential to increase competition in agricultural markets.