Foreign wheat industry threat to Aussie grain producers

Russia's growing wheat production poses a threat to the future of Australia's 9 billion-U.S. dollar grain industry, a report has said.

The report, released by the Australian Export Grains Innovation Centre (AEGIC) from its Perth headquarters on Monday, said grain exports from Russia would grow a further 60 percent by 2030.

Ross Kingwell, the lead author of the report, said that the low costs of the supply chain in the Black Sea region would increase low-cost competition in Australia's key Asian markets.

"There is no single silver bullet of response to the competitive challenges Australia's wheat industry faces," Kingwell, an agriculture professor at the University of Western Australia, said in a release on Monday.

"A series of actions is required. To remain competitive, it is crucial to keep innovating to ensure higher productivity and efficiencies occur on-farm and throughout the Australian supply chain."

A bumper harvest for wheat producers in Russia, Ukraine, Kazakhstan and North America has flooded the global market with wheat, causing prices to collapse to a new low of 180 U.S. dollars per ton.

The AEGIC report said that because wheat would not be worth selling for Australian farmers at that price, large exporters are expected to store their grain for years.

CBH Group, one of Australia's largest wheat exporters, has already started constructing an extra 4 million tons of bunker storage to cope with the big crop, low prices and low market appetite.

Kingwell said that well-considered, coordinated and strategic future actions should guarantee the security of Australia's grain industry.

"Although the situation, with Black Sea wheat flooding traditional Australian markets, is of mounting concern Australian wheat remains well-placed to retain its market share, particularly in southeast Asia, where the demand for wheat is growing," he said.

Russia produces 107 million tons of grain annually, more than triple Australia's annual production of 30 million tons, at a lower cost than Australia.

Source : XINHUA