Population drives crop demand

RISING demand for grains and oilseeds, particularly from the Asian region, has set the scene for a bright future for Australian summer grain crops and the growers who produce them.

 

But it is no reason for complacency and the industry needs to continue on a path of agronomic and technological innovation if it is to continue to grow in size and profitability.

That was one of the key messages at the 2013 Australian Summer Grains conference at the RACV Royal Pines Resort at the Gold Coast recently.

The conference drew together the maize, soybean, sorghum, sunflower and mung bean industries, and hosted the largest number of international speakers ever seen at an Australian summer grains conference.

Rabobank senior analyst for grains and oilseeds Graydon Chong, Sydney, told the conference continued volatility in currency markets and shifting world grain stocks would present opportunities and challenges for local producers.

“From a commodity markets perspective we are likely to see the grains and oilseeds market soften in the second half of 2013 as a result of more supply of corn and wheat coming online from the US and the Black Sea region,” he said.

“We are seeing old crop prices remain firm with sorghum prices over $300 a tonne, which is a phenomenal price for sorghum.

“But as we transition through 2013 from tight stocks to a balance sheet which is going to loosen up considerably, growers should think about the outlook for prices for the next six months and what they can be doing now to mitigate against market movements.”

Mr Chong said there was strong growth in Asian markets and it was important for Australian growers to take advantage of that.

“We send over four million tonnes of wheat to Indonesia at the moment and we think that will continue to grow. We’re seeing strong growth in Chinese incomes, which is driving change in their consumption patterns.

“We are expecting more demand for animal protein like meat products in those countries and as a result we will see a draw on Australian grain for that market where we have a lot of freight advantage compared to other origins for grain like the Black Sea, South America or the US.”

KPMG director and demographer Bernard Salt told the conference Australian grain growers stood to benefit from a continued rise in the world population at a time of finite arable land resources.

Mr Salt said the world’s population had risen from 2 billion people at the start of the 20th Century to 7 billion today and was projected to peak in 2070 at about 9 billion.

He said an extra two or three billion people over the next 50 years would be a key demand-driver for industries such as agriculture.

“I think there will be a mad scramble for food, resources, water, space, security and lifestyle,” he said.

Mr Salt said the world currently produced 2.5 billion tonnes of grain annually, or about a third of a tonne of grain per capita across the planet.

But to meet the projected population of nine or 10 billion by 2070, production would have to be increased substantially.

Back home, he pointed to the rapid rise of Asian populations in the Australian community as having the potential to dramatically shift the attitudes and palettes of Australian consumers over the coming decades.

Census data showed the composition of the Australian population changed significantly between 2006 and 2011, sending important messages to the food production sector about likely future consumer demand trends.

“The fastest growing influences on the Australian consumer palette market are Asian influences,” Mr Salt said.

“It took the Italians maybe 30 years from early arrival in the 1950s to shift our palette to accommodate olive oil and pasta and eating out on the pavement as they do in the piazzas and plazas of Europe.

“So what will the Chinese, the Indians and the Arabic people’s preferences for grains be? Not just selling product into those minorities but understanding that those minorities then shift the thinking and palette of mainstream Australia. That’s where some opportunities lie.”

The census found the Indian population increased most in Australia from 2006 to 2011, up 101 percent from 147,100 to 295,400.

That was followed by a 54pc rise in Chinese people in Australia from 206,600 to 319,000 and, surprisingly, a 42pc jump in the Philippine population from 120,500 to 171,200.

A Bureau of Statistics study of consumer household spending released last year demonstrated the changing trends of consumer budget allocation to individual foodstuffs.

From 2004 to 2010, consumer household income increased by 38pc and the food items that attracted the greatest share of increased expenditure were fresh berries and particularly blueberries, butter, fresh leaf vegetables and particularly baby spinach, flour and fresh cream.

“There are some themes here. Healthy and fresh is one theme and authenticity is the other – baking and the preparation of food,” Mr Salt said. “These micro-shifts in the way in which households think, consciously or unconsciously, have a major impact on the demand for your product.”

Farm Weekly