Ground Cover North : Ground Cover 051 August-September 2004 - North
ABARE REPORTS 6 AUGUST 2004 Growing world demand for Italian pasta, plus production constraints in Italy, could significantly boost the prospects for Australia's developing durum industry, according to the latest Australian Commodities report by the Australian Bureau of Resources and Economics (ABARE). The report's findings strengthen GRDC- supported initiatives to expand research into durum growing in Australia. Italy is the world's largest pasta exporter, accounting for around 53 percent of world exports, which in recent years have been growing at five percent a year. However, Italy is not expected to be able to increase its own production to meet this rising demand because of changes to farm support payments under the European Union's Common Agricultural Policy. Durum is already a small but important contributor to Australian wheat production and there has been increasing grower interest in supplying this premium market. However, growing durum can be a fickle business. Production and seasonal factors must remain optimum for the grain to achieve the required quality. Consequently, Australian exports have fluctuated between 100,000 and 600,000 tonnes during the past five years. (See table 1) During this period Italy has remained Australia's major market, taking well over 50 percent of Australia's durum exports. Growers of high-quality durum wheat receive a premium over other wheat varieties. In 2002-03 that premium was $69 a tonne over Australian premium white wheat, and $31 a tonne over Australian "prime hard" wheat. (see table 2) With the premium for durum wheat over other varieties expected to narrow in 2004-05, the level of risk associated with durum production may even rise in the short term until research produces varieties more tolerant of a wider range of Australian growing conditions. To obtain the report, go to www.abare.gov.au/ australiancommodities/pdf/AC_june04_ durumwheat.pdf Russia -- once a major market for Australian wheat -- is consolidating itself as a significant grain exporter and a competitor to Australia in key grain markets. A new GRDC-sponsored report by the Australian Bureau of Resource and Economics (ABARE) has confirmed Russia's improving production since the fall of the centralised Soviet system. It also underscores the changing market environment facing Australian exporters. The report, Russian Grains Industry -- On The Move, estimates that Russian grain exports could increase by up to six million tonnes for wheat and four million tonnes for coarse grains (mainly barley) during the next five years. This is in stark contrast to a decade ago, when Australian exports made up a significant proportion of the 18 million tonnes of grain that Russia imported each year. From 1993 to 2001, a drop in demand for animal feed grain saw Russian imports dwindle to around 4mt a year. Since then, Russia has improved its production and in 2002-03 exported 13mt of wheat to the southern European feed wheat markets of Italy, Greece and Spain, and the North African markets of Algeria, Morocco and Egypt. Barley exports were around 3mt, with 50 percent destined for Saudi Arabia. ABARE says that an expansion of Russian grain production will lead to increased competition with Australian exporters, particularly in key Middle Eastern markets. Before the drought in 2002-03, Australia exported 40 percent of its wheat (around 7mt) and 60 percent of its barley (around 2mt) to the Middle East. The freight advantage enjoyed by Russia would make it competitive in these markets. Russian wheats are of a soft and generally lower quality variety compared to Australian milling wheats. However in recent years, rather than rely on one supplier, importers have been prepared to import and blend a variety of wheat from different sources to produce a flour of acceptable quality. Market share issues aside, economic modelling by ABARE suggests that the increased world supply generated by Russian exports could force world wheat prices to fall by up to 2.8 percent and coarse grain by 2.6 percent. Russia's gradual transition since 1998 from grain importer to wheat and barley exporter has the potential to affect world markets and stymie Australia's export efforts in the Middle East, but it is by no means confirmed. Climate has a major influence on Russian grain production. Variability in wheat crop yield (between 1.03 and 1.97 tonnes a hectare during the past 10 years) exacerbates the problems caused by poorly developed infrastructure along the supply chain. Despite its progress, Russia's agricultural sector still suffers from ageing, unproductive farm structures, lack of capital and credit facilities, confused price signals, and cumber- some, often conflicting, regulatory and legislative impediments. The ABARE report, Russian Grains Industry -- On The Move, is available free from Ground Cover Direct, 1800 11 00 44, ground-cover- email@example.com From a net to nyet buyer RUSSIAN FEDERATION GRAIN TRADE YEAR 1997 1991 1995 1999 2003 20 15 10 5 Mt -5 -10 -15 -20 -25 EXPORTS IMPORTS Prospects bright for Australian durum Work to be done: the Russian industry needs modernising.
Ground Cover 052 October-November 2004 - North
Ground Cover 050 June-July 2004 - North