Warning for WA growers to improve and market their own product if the industry is to survive
Updated
Paul Carmody has been a farmer in WA's Great Southern for almost 40 years and he's not about to let his hard earned livelihood slip away.
"Our industry has gone from around 14 or about 13 thousand growers ten years ago to a bit over four thousand in WA today, it's a challenge for the whole industry," he said.
He may be one of the shrinking number of farmers in Western Australia but he's doing everything he can to make sure he's still got skin in the game.
"You need to be aware of what the market required because otherwise we'll end up like Holden or Ford, producing a product that no-one wants," he said.
Instead of relying on his exporter to market his product, he started travelling to South East Asia with his local grower group to meet buyers ten years ago.
"It gives you a greater understanding of what you are producing, rather than just a bulk commodity, you can get a clearer understanding of what you need to be producing and how we need to be producing that," Mr Carmody said.
Demand now directly influences what he grows.
"We've grown high quality or higher protein, aimed for higher protein wheat and we've changed the barley varieties that we grow because the premiums weren't being found that we needed to keep our business viable," Mr Carmody said.
Australia well placed to capitalise on growing demand from Asia
In the 2012/2013 season, Western Australia shipped 6.8 million tonnes, or almost two thirds of its grain to Asia.
The biggest buyers are Indonesia, South Korea and Japan.
In total, the shipments raked in $2.2-billion for the WA economy.
Asia is clearly buying big.
But as the market continues to grow, it doesn't mean Australia will automatically win business.
Grain consultant, Nasir Azudin, says it has actually become much harder.
"I feel the absence of the AWB has actually opened opportunities for competitors, now the competitors have come in and taken over some share of the market," he said.
Dr Azudin spent a decade at the Australian Wheat Board and now consults for WA's bulk handler, CBH.
His job is to make sure Asian buyers know what's on offer and how best to use it, a job AWB once did before the market was deregulated in 2009.
"As far as I can see most of the exporters are just selling wheat, wheat becomes a commodity," Dr Azudin said.
"They are just selling wheat based on the price but they're not actually explaining to the customers how best to utilise the wheat or what are the special offerings that Australia wheat has above price.
"All those extras that Australian wheat is not being fully optimised by the customers."
Paul Carmody agrees that growers and grower groups are basically having to take the place of the old AWB.
"Someone has to fulfil the industry good which is promotion, market development, so that you can have an independent source of information coming through to the grower," he said.
Improving Australia's product to win more market share
A team of scientists from the Australian Export Grains Innovation Centre [AEGIC] in Perth is working to make sure Australian grain is the best product it can be.
AEGIC's Ros Jettner says the organisation was formed in 2012 to link growers with buyer needs.
"I don't think we can rely on our proximity to our market and also the quality that we've been producing in the past because there are competitors that would like to access the market," he said.
Plant breeding companies give the researchers new varieties of grain to test against what is already commercially available.
If the new variety performs better, the breeding company will then work with the scientists to try and get the product to market.
"We need to ensure that the varieties we are selecting and growing are also of excellent quality so we're meeting the market requirements for both quality and functionality of our grain," Ms Jettner said.
Producing high quality grain isn't the only challenge; overcoming drought is also a focus.
"We need varieties of grain, when grown under our environment produce high yields and are resistant to a wide range of pests, so we can get that consistency of supply into the market place," Ms Jettner said.
Overseas competitors vying for a piece of the pie
So far it seems the efforts haven't been enough to stave off competition from other countries.
Greg Harvey heads up one of Asia's largest flour milling operations, the Interflour Group.
It runs six flour mills across South East Asia and is half owned by Australia's CBH Group.
"I think there are very significant threats to Australia's market share," he said.
"The Black Sea has some great natural resources and also it's had a lot of investment in the last 10 years, the industry has ramped up to increase it's export market and Asia is its clear target.
"The established competitor in the US and Canada is always going to be a tough competitor for Australia, they've got a good quality product and they are very, very good at what they do," Mr Harvey said.
Last year, the company sourced 76 per cent of its wheat from Australia. Mr Harvey says most of that came from WA.
"We strategically focus on the bread market, it's the fastest growing market segment in Asia and particularly South East Asia," he said.
"We take a mixture of our wheat from Australia and the US, to get the quality.
"What we're trying to do is work with farmers and plant breeders to increase the portion of Australian wheat."
Apart from improving wheat quality, he says establishing more deals similar to the one his company has reached with CBH is essential for Australia to increase its market share.
"The real opportunity for Australian agri-business and West Australian agri-business with our core markets of Indonesia, Vietnam, Malaysia, Thailand, is to invest in those markets.
"Create factories, processing facilities, export the raw product into something you own in those markets and make more margin, that's where I think the future really lies."
But Dr Azudin says while that could be the future for some companies with the financial means, he believes Australia must first work to improve its product to increase the amount Asia buys.
"In a way if we had planned it better, where we have an individual body that goes out to market to do promotion and support for our wheat marketing, that's fine but at the moment there's no actual body that fits that particular role.
"We need to show the customers they can do it, they can produce a better quality product using Australian wheat, not just confining Australian wheat to noodle production."
A challenge Paul Carmody hopes other farmers will start to overcome.
"Grower groups, and I think growers themselves, need to be more attuned to the market and what marketeers require and hopefully through that alliance or alliances, that can be formed, we can find a way forward."
Topics: grain, perth-6000, albany-6330, geraldton-6530, bunbury-6230
First posted
