Miller Magazine Issue: 123 March 2020

Australıa 85 MILLER / MARCH 2020 competitors.” Major trends within the grains industry specified by the Australian Export Grains Innovation Centre include: • Consolidation across the grains industry supply chain leading to a reduction in the number of large grain accumu- lators/marketers • Increased vertical and horizontal integration, for example CBH and GrainCorp have forward integration in flour milling; Viterra and GrainCorp in barley malting, and AWB Ltd into rural services through their Landmark business • Increased overseas ownership/involvement in the grains industry supply chain with the recent examples of Viterra‘s acquisition of ABB • Deregulation of the bulk wheat export market enabling the entry of international grain traders and expansion of local traders, • Continued rationalisation of suppliers of the major grain production inputs - fertilisers and chemicals – and matching rationalisation in rural distribution, • The emergence of the north-eastern and south-eastern regions as a predominantly domestic market with processing, human consumption and livestock feed markets growing rap- idly. SMALLEST WHEAT HARVEST IN OVER A DECADE Australian wheat is highly valued for its excellent perfor- mance across a wide range of food products, especially noo- dles and breads. Australian wheat is in demand in interna- tional markets, especially in Asia and the Middle East. About 65-75% of Australia’s total wheat production is exported each year. More than 30% of Australia’s wheat exports are used to make Asian noodles. Wheat is the largest enterprise in the Australia grain indus- try, grown throughout southern and eastern regions in the crescent known as the Australian grain belt. Australia produces about 25 million tonnes of wheat per year, accounting for 3.5 percent of annual global production. Western Australia and New South Wales are the largest production states. A devastating bushfire season in Australia has led to signif- icant crop loss. The fires affecting some of the most densely populated areas of the continent had a very negative effect on agriculture. Australia’s wheat harvest in 2019/20 season is estimated to have been the smallest in over a decade, and about 40 percent below the 10-year average. As a result, wheat exports are expected to fall for the third straight year. The United States Department of Agriculture (USDA) forecast for Australia’s wheat production in 2019/20 is revised down to 15.0 MMT (million metric tons), 2.3 MMT lower than the previous year’s poor crop. The smaller crop was caused by several factors including: • Continued multi-year drought in much of northern New South Wales and southern Queensland resulted in a second year of reduced wheat sown area. For wheat that was sown, poor yields were widespread, with some winter grain crops being cut for hay. Although wheat production is estimated to have increased somewhat in southern New South Wales due to more precipitation, overall production in New South Wales is estimated to be less than half of average levels. While tradi- tionally New South Wales is the second largest wheat produc- ing State in Australia (after Western Australia), in MY 2019/20 it is estimated to be only the fourth largest. • Following a huge crop last year, Western Australia expe- rienced dry conditions and frost events in some key wheat growing regions. As a result, wheat production fell by about half of last year’s level. In their December crop report, the Grains Industry of Western Australia estimates the MY 2019/20 crop at 5.38 MMT, compared to MY 2018/19 crop estimated by ABARES at 10.2 MMT. Victoria was the one bright spot for wheat production in Australia, as much of the region there had plentiful rainfall during the growing season, resulting in a bumper harvest. While Victoria typically accounts for only about 13 percent of