Aussie wheat under pressure

By Alana Christensen

Efforts are continuing to grow the value of Australian wheat overseas following intense pressure from low-cost competitors.

Australian Export Grains Innovation Centre has hosted a suite of technical seminars in Indonesia, teaching 75 representatives from major Indonesian flour mills about the benefits of using Australian wheat.

AEGIC wheat quality technical markets manager Dr Larisa Cato said AEGIC was leading the long-term positioning of Australian wheat in Indonesia, in collaboration with industry partners.

‘‘The Indonesian flour milling industry is highly competitive with very low margins. Flour millers feel they are being ‘forced’ to use more wheat from low-cost origins such as Russia, Ukraine and Argentina, which is putting Australian wheat under increasing pressure,’’ Dr Cato said.

The drought in eastern Victoria has seen Indonesia look to South America to fill the supply void.

Indonesia usually takes about four or five million tonnes of Australia’s wheat but recently placed an order for about one million tonnes of wheat from Argentina.

Rabobank research analyst Oscar Tjarka said it was the biggest order between the two countries.

Although the countries have been trading together for a number of years, he warned this could pave the way for increased orders between them in the future.

Wheat demand in South-East Asia continues to rise, forecast to grow three per cent per year.

‘‘The signing of the trade deal with Indonesia, Australia’s largest wheat export market, will see Australia have a 500000 tonnes per annum feed grain quota, which will increase by five per cent per annum to include wheat, barley and sorghum,’’ Mr Tjarka said.

He said while the backdrop for wheat demand growth in South-East Asia was positive, there were challenges for the Australian sector supplying to the region.

‘‘The Australian industry is really at a crossroads, as to whether it increases its quantity by increasing yields, including increasing the supply of feed wheat, or maintains its value proposition as a high quality producer.

‘‘To do this, intelligence needs to be gathered around the characteristics of Australian wheat that are either highly valued or that are required by different users, and this needs to be communicated between growers and the market.’’