Domestic grain market to continue to grow

Domestic grain market to continue to grow

Grains
Australia is predicted to grow an extra 5.5 million tonnes of grain annually according to the Australian Export Grains Innovation Centre (AEGIC).

Australia is predicted to grow an extra 5.5 million tonnes of grain annually according to the Australian Export Grains Innovation Centre (AEGIC).

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The domestic market is going to continue to grow in importance for east coast grain producers according to an industry expert.

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AUSTRALIA will continue to be a net exporter of grain, but a growing domestic market is going to mean situations such as the past two seasons where there is a localised shortfall will become increasingly common.

They were some of the key findings of recent Australian Export Grains Innovation Centre (AEGIC) analysis in its Australian Grain Outlook 2030 report.

Chief economist at AEGIC Ross Kingwell said the domestic market on the east coast was already markedly different than when the wheat market was fully deregulated in 2008.

"The east coast domestic market is a major customer for grain producers in the eastern states," Professor Kingwell said.

"We still see the east coast being a net exporter of wheat in most years, but the gap between demand and supply will be smaller and if there are production issues then grain from the export-focused states of Western Australia and South Australia will be required to meet that shortfall."

Prof Kingwell said AEGIC was forecasting an average 5.5 million tonne increase in production in an average year, representing a jump of around 13 per cent, based on current average total grain production of around 42 million tonnes.

Of that, he expected over half of that added production would be consumed domestically.

"The majority of that will be for animal feed, sectors like poultry will continue to grow and to have more demand for grain," Prof Kingwell said.

He said the change in dynamics simply reflected Australia's demographics.

"Australia's population is set to jump to 30 million by 2030, and most of the increase is going to be in those densely populated urban areas along the east coast," he said.

"With 75% of Australia's consumers currently living in eastern Australia, almost all the extra grain produced in the eastern states will be consumed in those eastern states."

But he said Australia would continue to develop export markets for grain from the western two states.

By 2030 between 2.4 and 2.8mmt of extra grain would be available for export nationwide.

"Most of this will come from the less populous states of Western Australia and South Australia," he said.

He did not foresee an issue in finding a home for the grain in spite of sluggish international grain markets in recent years.

"Export demand in key areas is projected to increase, so we expect the extra grain will find a home.

In terms of the logistics of growing the extra 5.5m tonnes in the face of an increasingly volatile climate Prof Kingwell said he was factoring in yield increases.

"The area planted to crops is not likely to increase towards 2030, so yield increases aided by the skill of farmers, researchers and advisers will be crucial."

He said he foresaw a larger plant in Australia's relatively small high rainfall cropping zones, which would help boost overall average yields, while acreages in more marginal areas may come back.

The story Domestic grain market to continue to grow first appeared on Farm Online.

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