Miller Magazine Issue: 142 October 2021

86 INTERVIEW MILLER / OCTOber 2021 Global wheat prices climbed to their highest since 2013. Do you expect prices to go higher? Which fac- tors will drive the markets? The big drivers are the moment are negative events overseas impacting the major producers, from Russia to Canada. Luckily Australia has been distanced from over- seas issues and has had a season of dreams (so far). Currently, Australian pricing is trading at a discount to overseas futures (Chicago), where typically, our pricing levels would be at a premium. This is a result of both a lower premium here and higher prices overseas. The high prices are a godsend for our producers, but there is a lack of quality premiums for protein, which would typically be associated with a wetter year. If a wet harvest eventuates, we expect the potential for higher protein premiums to emerge. After the pandemic, the demand for grain has in- creased in the world. Do you think this demand will remain strong? Demand is demand. Typically demand increases in a relatively linear fashion, between 1-2% dependent upon the country. My view is that demand will continue to set- tle in the long term at these more average levels, with years of aberration. I do question how much of the demand is true demand or a function of issues with localized supply. Do you think the worldwide shipping container shortage will continue next year? The container shortage is a real issue and one which we are facing in Australia. The access to available empty containers is constraining a number of agricultural ex- ports, but especially meat, wool and pulses. I expect it will take some time for global supply chains to get back to the level of efficiency we previously were blessed with in pre-Covid times. I would expect that we will be looking at a disrupted supply chain until at least the second quarter of 2022. What are the impacts of the pandemic on the Aus- tralian grain industry? How will COVID-19 have a last- ing impact on the agriculture industry? Whilst Australian cities have suffered under the world's longest lockdowns, the impact on the grain industry will be minimal. The supply chain has had some slight hic- cups, but our benefit as a continent at the end of the world has allowed us to remain largely locked from the worst issues of COVID-19. The biggest impact has been the continual shut down of events that the industry uses to socialize; as we know, the grain industry is a social industry, and zoom just doesn't cut it! Russia has increased its wheat exports to Southeast Asia in recent years, threatening the dominance of Aus- tralia. However, Russia's projected wheat exports for 21/22 are at the lowest level in five years due to a small crop and slow export pace. Do Russian export regula- tions give Australia an advantage in the market? The Russian export regulations are another benefit to the Australian industry. The government interventions in the form of export taxes should, in theory, reduce Rus- sian exporters' competitiveness. This was intended to reduce the cost of grains for Russian consumers. In reality, government interventions like this will only result in farmers planting fewer acres as their local prices decline, and therefore in the lon- ger-term increase price as Russia drops down the rank- ings with lower surpluses. Similar action in the export beef industry in Argentina re- sulted in fewer cattle being produced as farmers were disin- centivized. The export tax improves the competitiveness of Australian wheat, and that is only a good thing for our industry. Chart 1 Chart 2