New Russian Grain report:

• Russian grain exports are expected to increase by 60 percent by 2030
• The Black Sea already makes up 30 percent of the world wheat trade
• Competition in Australia’s key Asian markets will increase as a result
• Growth will be a gradually rising tide, not an immediate tsunami
• Australia must focus on its strategic strengths – enviable R&D and crop breeding funding system, and quality and innovation
• Continuing to drive down supply chain costs and become more efficient is crucial

The authors of the report: Dr Peter White, Dr Chris Carter, Prof Ross Kingwell and Peter Elliott.

Grain exports from Russia will grow by 60 percent by 2030, resulting in increased competition in Australia’s key markets in Asia, a new report released this morning predicts.

Russia and Ukraine continue to emerge as heavyweights on the global wheat scene, raising concerns for Australian grain growers, processors and traders about the impact on Australian wheat exports.

The Australian Export Grains Innovation Centre (AEGIC) has recently undertaken competitor analyses of both Black Sea grain producing countries. Following its report on Ukraine released in August, this morning it released its in-depth analysis of the Russian grain industry, and implications of its forecast growth for Australia.

Export growth is a concern for Australia

Russia’s rapidly-growing export grains industry and relatively low supply chain costs were of concern to Australia, the report’s lead author, Professor Ross Kingwell, said.

“There is no single silver bullet of response to the competitive challenges Australia’s wheat industry faces,” he said.

“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.

“We need to keep committing to research and development that lifts industry profitability.”

Underlines need for investment

Prof Kingwell said Australian wheat exporters will also face more intense competition from North American organisations funded to service their Asian customers.

“Australia needs to sustainably fund and coordinate intelligence about the requirements end-users have for Australian wheat in order to provide a product they value more,” he said.

“Australia’s North American competitors are already better at funding and coordinating their servicing of Asian customers and we need to address this. If we know what our customers want and value, we can better serve their needs.”

No need for panic

Prof Kingwell said Australia should not panic about increased Black Sea competition.

Rather it should ensure that future actions are well-considered, coordinated and strategic.

“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 South East Asia, where the demand for wheat is growing,” he said.

“The Australian grains industry is endowed with an enviable R&D and crop breeding funding system.

“By contrast, wheat variety improvement and grains R&D in the Black Sea is less well-funded, less organised and less focused on efficient outcomes.

“Knowing more about what wheat quality traits are most valued by end-users in key Asian markets will help better target wheat breeding in Australia.

“Australia faces a tide of Black Sea grain, not an immediate tidal wave.

“In that sense, Australia has time to respond and so should not panic. But a status quo response will not best serve Australia’s wheat industry.

“Most Australian grain growers, unlike many Black Sea grain growers, need not be forced or panicked into selling their wheat.

“Australian farmers benefit from effective grain storage, complemented by a range of price risk management options, so they can be more strategic about selling their grain.”

• The full report: Russia’s Grain Industry: Implications for Australia can be read on the AEGIC website here