Australian Grain Industry
The Australian grains industry is an important part of the Australian economy and farm sector. Total production of grains in 2001/2002 was 42 million tonnes, worth in excess of $8 billion.
The grains industry can be broken up into three distinct product groups:
wheat - includes bread wheats, and durum wheat used in the production of pasta products
coarse grains - includes barley, sorghum, oats, triticale and maize
oilseeds - includes canola, cottonseed, sunflower seeds and soybeans
Within Australia, the wheat market is the largest of these four, with wheat production exceeding production in the other three categories combined.
The major non-wheat products that AWB trades include barley, sorghum, canola and pulses.
Australian Wheat Market
Australian wheat production
Wheat is the largest grain crop in Australia. Most wheat varieties grown in Australia are sown in autumn, grow rapidly during the spring months and mature from early to mid-summer.
Harvesting commences in Queensland in September/October and gradually progresses southward, finishing in Victoria and the southern part of Western Australia in January/February.
The wheat grown in Australia is predominantly white grained. This, together with Australia's strict quality control standards, has ensured that Australia has an excellent reputation in the international market and allows Australia to differentiate its wheat from that of other major exporting countries.
The wide geographical spread of wheat growing areas means that growers are subject to differing climatic conditions and soil types. These features act to limit the overall effect of adverse climatic conditions on overall national production, though there is still some degree of volatility in national production from year to year.
Over the last 20 years, Australian wheat production has varied between 9 million tonnes and 25 million tonnes per annum, with the average over this period being 16 million tones a year.
In recent years, the area harvested for wheat has increased significantly, largely as a result of growers switching from wool production to wheat production following decreases in the price of wool. Average wheat yield per hectare has also been rising.
Australian exports
Australia is one of the four largest wheat exporters in the world, along with the US, Canada and the EU.
The level of Australian wheat exports is essentially determined by wheat production. With domestic consumption being relatively stable over time (at about 5.5 million tonnes per annum), any excess production is available for export.
The level of exports over the past five years has averaged 17 million tonnes per annum.
Global wheat market
Global wheat production levels have been growing, on average, at 1% per annum over the past 20 years.
The world's five major wheat exporters are the US, the EU, Canada, Australia and Argentina, and these exporters are expected to account for approximately 75% of the supply of wheat traded internationally until 2012. This figure has declined from the average of 83% during 1996 to 2001, this is linked to the increase of international competition from minor exports.
Aside from Australia, only Canadian wheat is exported via an explicit single desk marketer (the Canadian Wheat Board). Argentina, the EU and the US export through traders. The EU and the US are both subject to significant intervention from government price support policies.
Global consumption
Historically, wheat has been a staple product with the level of consumption largely unaffected by changes in its price and the price of substitutes (such as rice, maize and oats). Over the past 20 years, worldwide wheat consumption has been growing on average at a stable 1% per annum. Total world consumption is around 595 million tonnes per year and this is expected to continue grow over the coming years. The global wheat trade represents a a combination of both food and feed demand - food demand for wheat is generally stable and only minimally responsive to price fluctuations, however, feed demand is variable to grain trade patterns.
Domestic consumption
Approximately 5 to 6 million tonnes of wheat is used by the domestic market annually, with the remaining production exported. Following deregulation of the domestic wheat industry in 1989, growers have the choice to sell their wheat directly to consumers and domestic traders, usually utilising cash contracts, or deliver their wheat into pools.
Domestic use can be broken down into the following broad categories depending on the end-use of the wheat:
- flour - around 2.7 million tonnes of wheat is used annually by Australia's flourmills which use it in the production of flour for human consumption and for industrial uses
- stock feed - the amount of wheat used for stock feed varies considerably depending on seasonal price differences between wheat and other substitute grains as well as livestock prices. Total wheat stock feed consumption can range from 2 to 3 million tonnes annually
- seed - around 0.6 million tonnes of wheat is used annually as seed for the production of the following season's crop
Coarse grains
Coarse grains are grains that are utilised for stock feeding and malting purposes. They are the second largest category of grain production in Australia. They compete at times with wheat in providing energy and fibre to compound animal feeds. Coarse grains include barley, sorghum, oats, triticale and maize.
Depending on seasonal production, around half of the coarse grain crop is disposed of on domestic markets. The domestic use of coarse grains has generally increased because of growth in the intensive livestock sector.
Barley is Australia's second largest field crop. It can generally be grown in the same areas as wheat in Australia, but is more suited to the lighter soils and coastal areas. Barley is also (after wheat) the only crop of significant tonnage where Australia is a major global producer. Australia accounts for approximately 18% of world barley trade.
The majority of barley produced in Australia is exported. The remainder is used domestically for feeding animals or for malting and brewing, with a small amount used directly for human food.
Sorghum is Australia's fourth largest field crop. Almost all of Australia's sorghum is grown in either Queensland or NSW. Approximately 0.6 million hectares of sorghum is sown each year in Australia, producing approximately 1.6 million tonnes annually.
The majority of sorghum produced in Australia is consumed domestically due to high local demand. The domestic market in Australia uses sorghum as the cheapest alternative grain in feed rations, especially in northern Australia.
The export market has been of increasing importance to the sorghum industry of Australia. Australia exports predominantly to Japan, with exports of approximately 0.5 million tonnes annually.
Oilseeds
Oilseeds are seed crops grown for the production of vegetable oil. They are crushed to produce edible and industrial oil.
The main oilseeds currently grown in Australia are canola, cottonseed, sunflower and soybeans, with small areas of safflower and linseed.
Canola is Australia's third largest field crop.The area of canola harvested in Australia increased rapidly from around 400,000 hectares in the mid 1990s to a record 1.9 million hectares in 1999/2000. Western Australia and NSW have experienced the most rapid growth over this period.
Canola has emerged as a significant crop in terms of the gross value of both oilseeds and total crop production. Approximately 1.35 million hectares of canola was sown in Australia in 2001/02, producing 1.8 million tonnes of canola.
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