THE Asia Pacific Century is upon us and the Australian grain industry is in a good position geographically to make the most of the opportunity, particularly in building strong relationships with South East Asia, according to US Rabobank grain specialist Sterling Liddell.
Mr Liddell, who was guest speaker at the recent Hart Field-Site Group's Getting the Crop In seminar at Clare, said while China continued to grow, it was at a reduced rate.
"The real growth engine we see is SE Asia," he said.
"The food chain goes from subsistence consumption to convenience to enjoyment, and China is already at the convenience-enjoyment level, while SE Asia is starting to enter that period.
"That means increased protein consumption, and also wheat and prepared baked goods."
He said China was still a strong player in wheat, especially in the high-gluten product market.
"Last year China didn't want to import much wheat but in the end, they did go looking. Not for protein, but for gluten," Mr Liddell said.
"So it was those marketers that could get into their millers early and offered high-gluten products that were rewarded."
Mr Liddell said it was countries with "good organisation and enough velocity to get noticed" that would get the most out of market opportunities.
"In America we have opportunity, but Australia has even more because of its location," he said.
He said it was crucial for Australia to understand who its competitors were.
"For Australia that is Canada, Russia and the Black Sea region is a major player, but their quality is not consistent so there will always be a role for your low cost wheat," he said.
"The winner will be who can organise and better-target specific markets."
Another opportunity stemmed from the US, where wheat was being "pushed out of the market" by soybeans and corn, and production was not keeping up with consumption.
Mr Liddell said the US exported a substantial amount of wheat, including more than 50 per cent of its white wheat and a substantial amount of softer red wheats.
"We have cut back on producing middle level protein wheat (our commodity wheat), so we have not had enough wheat to meet our own demand," he said.
"We are supplementing that now with imported wheat, and this will be a trend that continues and even grows.
"This means the US will have less effect globally in exports, providing an opportunity for others to grow if they can effectively target markets."
He said the US was also in for some tumultuous times in the next 15-20 years, not just with its competitiveness but in storage and logistics.
"In the US, more than 640 million bushels can be stored, and more than 55pc of that storage is on-farm," Mr Liddell said.
"Rail transportation prices have also spiked because of ageing and under capacity of infrastructure.
Major player Russia was also one to watch, Mr Liddell said, as 25-26pc of the global export market could now by supplied by the Black Sea region.
"We are going to have to watch what policy is coming out of Russia because it will have a big impact on the future of the markets," he said.
Alisha Fogden
Cropping editor of Stock Journal.
Cropping editor of Stock Journal.
