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Grain and Flour Market in Australia

08 January 201415 min reading
Being one of the important grain producers of the world, especially wheat and barley, Australia is popular especially for its agricultural product export. A great part of the grain products produced in the country is used for export rather than domestic consumption. Being especially among the top 3 countries in world wheat and barley export, Australia has approximately 30 flour mills. Three of them have 80% of the Australian flour milling market., Being a country rich in natural sources; Australia is an important agricultural product and majorly wheat exporter as well as mining, metals and natural gas. The contribution of agriculture sector to the gross national product has been around 3% in the recent years. Having a constantly growing economy in the last 20 years, Australia owes this positive economy to its solid financial structure. Country’s independent Reserve Bank of Australia-RBA is the public institution of the country for money policies and aims to keep consumer price inflation averagely between 2 and 3% annually. The future of Australia is projected as the country with high talent and high income. It is stated that Australia does not compete with the low-income countries of Asia and Africa and also is not in the race with the countries producing low-value good and service for their export and imports. With an innovative and enterprising management understanding; Australia aims to be competitive in the sectors that provide high productivity and use mining, mineral, energy, agricultural sources and modern equipment with advanced technology. Australia is considered as the first country that got AAA for its economy from three rating agencies and a country preferred for short-term international capital flows for foreign investment. The most important risk for the economic growth of Australia in the recent period is the uncertainty in the global economy. The recession in developed countries would probably bring Australia’s export to a standstill position. It is inevitable for Australian economy to have reflections of a possible slowdown in Chinese economy due to the intense economic relations between Australia and China. AUSTRALIAN AGRICULTURAL SECTOR Australia has a large agricultural sector that meets a great part of the domestic demand and makes a significant contribution to the country export. Agriculture and livestock are the two basic premises of Australian export. Wheat, sugar, rice, meat, wool and cotton constitute the important export items. Among these products, sugar is the second most important exported product after wheat. Agricultural products that are grown mostly after wheat and sugar beet in Australia are barley, canola, sorghum and cotton seed respectively. The direct contribution of agricultural industry to GNP has been averagely around 3% in the last 10 years. This situation arises basically from the growth in the share of service industry in GNP. On the other hand; the contribution of agricultural sector to the country export in the last 5 years has been 35% and 30,8 billion dollar annually. Besides, agricultural sector employed 358.700 people directly in 2009. Livestock industry is one of the important sectors with its averagely 14 billion Australian dollar export contribution annually. GRAIN PRODUCTION AND CONSUMPTION Being one of the important countries in world wheat trade; Australia ranks 8th in world wheat production, 4th in barley production, 9th in sorghum production and 4th in oat production according to the data of 2012/13 season. According to U.S. Department of Agriculture Foreign Agricultural Service (USDA FAS) data; Australia realized 3,3% of world wheat production with its 22,4 million-ton wheat production in 2012/13 season. When the data of country’s wheat production is reviewed by years, it is seen that the production is between 20 and 30 million. Australia’s wheat production, which was 21,4 million tons in 2008/09 season, reached 27,4 million tons in 2010/11 season and 29,9 million tons in 2011/12 season. Declining to 22,4 million tons in 2012/13 season, Australian wheat production is projected to reach 26,5 million tons in 2013/14 season. When the last 10-year period is reviewed, it is seen that the country has recorded an increase over 100%. An important part of the wheat production in the country is exported and the amount around 6-7 million tons is used for domestic consumption. When the domestic consumption data is reviewed; it is seen that the consumption, which was 6,1 million tons in 2002/03 season, reached to the top level with 7,4 million tons in 2008/09 season and remained around at 6 million tons in the following years. Rice and corn production in Australia is less than other grain products. Australian rice production, which was 313 thousand tons in 2002/03 season, reached 840 thousand tons in 2012/13 season. It is projected that the rice production will decrease to 680 thousand tons in 2013/14 season. When it comes to corn, there hasn’t been an important increase in the last 10 years. Australian corn production, which was 316 thousand tons in 2002/03 season, reached to the top level with 451 thousand tons in 2011/12 season. Declining to 445 thousand tons in 2012/13 season, the production is foreseen to decrease to 380 thousand tons level in 2013/14 season. The country is used a great part of its rice and corn production for its own domestic consumption. As world’s fourth largest barley producer, Australia increased its barley production to 8,2 million tons in 2011/12 season; that amount was 3,8 million tons in 2002/03 season. Declining to 7,4 million tons in 2012/13 season, country’s barley production is projected to reach 8, 6 million tons in 2013/14 season. While Australia uses almost 50% of barley production for its own domestic consumption, the country exports the rest of the production. Taking place near the top in world oat and sorghum production, Australia realized 1,1 million tons oat and 2 million tons sorghum in 2012/13 season. FOREIGN TRADE IN AUSTRALIA Australia reached a foreign trade volume at 513,6 billion dollars with 262,5 billion-dollar export and 251,1 billion-dollar import values in 2012. Australia had a foreign trade surplus of 11,3 billion dollars as of 2012. Major products in the export of the country as of 2012 are iron ores and concentrates, coal, gold, oil gas and crude oil. Major import items are petroleum oils, private cars, and vehicles for the transport of goods and dosed drugs. China, Japan, Korea, India, U.S., Taiwan and New Zealand are major export markets of Australia. The import is made mainly from China, U.S., Japan, Singapore, Germany, Thailand and Korea. THE PLACE OF GRAINS IN FOREIGN TRADE Being one of the leading countries of the world in grain-based agricultural product export, Australia ranks 3rd in world wheat export, 2nd in barley export, 3rd in sorghum export and 2nd in oat export according to 2012/13 season data. According to the data of USDA; exporting 21,2 million tons of wheat in 2012/13 season, Australia realized 14,3% of world wheat export that was 147,6 million tons. When the country’s wheat export is reviewed by years; it is seen that the export, which was 9,1 million tons in 2002/03 season, has recorded an increase over 100% in the last 10 years. Reaching to the highest export amount in 2011/12 season with 24,6 million tons, Australia could realize 18,6 million-ton export in 2012/13 season. Australian wheat export is projected to reach 19,5 million tons in 2013/14 season. Making so little export of rice and corn that cannot be compared with large exporter countries, Australia is the second largest exporter of barley after European Union countries. It is the world’s largest barley exporter when the barley export is reviewed by countries alone. When the barley export of Australia is reviewed by years; it is seen that the export, which was 1,9 million tons in 2002/03 season, reached to the highest level of last 10 years with 6,3 million tons in 2003/04 season. Declining a little in the following years, Australia’s barley export reached 5,3 million tons in 2011/12 season in 2011/12 season but decreased to 4,8 million tons in 2012/13 season. Australia is projected to realize around 4,5 million tons of barley export in 2013/14 season. Ranking third in sorghum export after Argentina and U.S., Australia realized 1,4 million tons sorghum export in 2012/13 season. When it is taken into consideration that world sorghum export is 7,2 million tons, it is seen that Australia realized 19,6% of world sorghum export by itself. Another product for which Australia becomes prominent is oat. Ranking second in world oat export after Brazil; in 2012/13 season, Australia realized 225 thousand-ton (12%) part of world oat export that was 1,8 million tons. MILLING AND GRAIN PROCESSING INDUSTRY The Australian flour mill product manufacturing industry is highly concentrated and it is estimated that the industry’s top four players capture over 80 per cent of the market. Rationalization is expected to continue and fewer mills will service larger geographic areas. Nationally, flour mills tend to be located in metropolitan areas. The mills in the Eastern States accounted for 95 per cent of industry turnover in 2008. The numbers of mills in Australia have been declining over the years, while capacity utilization and output is increasing. There are currently 32 flour mills nationally, with an average capacity of 10.5 tons per hour. The trend is towards larger scale, automated operations. Capacity utilization averaged 83 per cent in 2007/08. In Western Australia there are three major millers, Weston Milling located in Northam, Allied Mills located in the west Perth metropolitan area Millers Foods located in Byford (south east Perth metropolitan area). In terms of output, it is estimated that these mills account for 60%, 30% and less than 10% of Western Australian production respectively. There is also Westcoast Milling which has a relatively small capacity but does supply a number of smaller bakeries. Western Australian milling capacity is about 3 000 tons per week and current utilization is about 67 per cent. Key Players in Australian Flour Milling Industry Manildra is the biggest player in the Australian wheat flour market with approximately 35 per cent market share, followed by George Weston Foods (Food Investments Pty Ltd) with 30 per cent market share and Allied Mills with 15 per cent market share. Manildra Milling Pty Ltd: Established in 1952, Manildra is an Australian, family owned business. The company is now the largest user of wheat for industrial purposes in Australia processing some 1 million tons of wheat per annum. Over the last 50 years, Manildra has vertically integrated and as a result diversified the product range to include flour, pre-mixes and products derived from flour such as modified starches, glucose syrups, maltodextrine, gluten, specialty protein products and ethanol. For the domestic market the Manildra mill packs forty−two different products. The mills export flour to eighteen different countries including Vietnam, Thailand, Taiwan, New Zealand, Indonesia, Tonga, Samoa and the Pacific Islands. Baker’s flour, noodle flour, cake flour, biscuit flour and a range of variations are among the exported products. George Weston Foods Limited (GWF): GWF is a wholly owned subsidiary of Associated British Foods Plc, one of the world’s leading food companies. GWF is one of the largest food manufacturers in Australia supplying breads, crumpets, pikelets, cakes, cereal products (including flour and bread mixes), ham, bacon, salami and other processed meat to the Australian market as well as exporting flour and frozen baked products to the Asian region. The Weston Milling subsidiary, is the second largest flour miller in Australia processing 370 000 tons of flour annually. Weston Milling products are primarily distributed to the wholesale flour sector. Weston Cereal Industries manufacture, distribute and sell a complete range of flours, bread mixes and bread ingredients, cake and pastry mixes. Weston Cereal Industries also distribute a range of dry and chilled ingredients to the small bakery and patisserie market. Allied Mills Pty Ltd: Allied Mills was purchased from Goodman Fielder in 2002 through a joint venture between GrainCorp (60%) and Cargill Australia (40%). According to company reports it is currently the largest producer of flour for human consumption in Australia, processing approximately one (1) million tons of wheat each year through its 12 mills across Australia. Allied Mills has a wide range of products including special flour types and brands. Laucke Flour Mills: Located in Strathalbyn, Laucke produces a variety of organic wheat and rye flours and pre-mixes (certified organic and halal). Laucke exports to South East Asia, North East Asia, North America, Singapore, Hong Long and the USA. Tasmanian Flour Mills: It is the only flour mill in Tasmania and produces flour and pre-mix flours for commercial and domestic use under the brand name Tas Taste Flour. Wholegrain Milling Company: It is a boutique flour miller specializing in stone-ground organic flours. Their grain is sourced from prime hard grain growing areas. Grains are stone ground using imported European milestones. Four Leaf Milling: It is located in Tarlee, South Australia and is a specialist organic stoneground miller, supplying the domestic market and dealing with only certified organic and biodynamic grains. Suraj International Products (Australia) Pty Ltd: It is located in Thomastown, Victoria and its principle activities are in the milling of flour, spices, rice and dry food ingredients. The mill produces specialty stone ground and polished flours. Suraj currently manufactures around 19 flour varieties. These include rice flour, barley flour, corn flour, rye flour, lupine flour, maize flour and soya flour. Cummins Milling Co Pty Ltd: It is flour, stock feed and abalone feed manufacturer with a turnover of just over $1 million. It exports to Oceania and New Zealand. Products include bread flour, pre-mixes, whole meal and pelleted feed for animals. Young Roller Flour Mill Co Ltd: It is an independently regionally based flour and feed mill in Young, New South Wales. Clover Corporation: It is a food ingredients company and has historically been a small player in the flour milling industry. The Clover Corporation opened a new flour milling plant in Northern New South Wales in 2005 that produces soy flour under the ‘Nu-Soya’ brand. Millers Foods (Byford Flour Mills): It is a 100% Australian owned and operated flour mill servicing the needs of the baking industry in Western Australia. Products include flour, meals and grains, bread premix, cake mix and ingredients. Westcoast Milling: It is also located in Canning Vale in the Perth Metropolitan area and a number of very small regional stone mills at Perenjori, New Norcia and Corrigin which produce low volumes in specialized areas. PASTA, PULSES AND BISCUIT MARKET IN AUSTRALIA Australia is an important lentil importer. Realizing 3,3 million-dollar lentil import as of 2011, Australia imported 270 thousand-dollar part of that amount from Turkey. In Australia’s lentil import; Canada has 38,2%, Myanmar 34,6%, India 5,1% and Sri Lanka 2,9% share. Turkey is the third most important supplier with its 8,3% share. In the recent years, the trend of eating at home with family members and friends has increased due to the effect of global economic crisis. As pasta is dish that is made easily, it has become the most profitable product with this trend. There are many pasta types in Australian market including gluten-free, whole wheat and organic pasta. It is foreseen that price competition in pasta sector will increase in the 5-year period between 2010 and 2015. It is considered that turning of large companies and the ones producing private label to the production of pasta with high added-value would support this competition environment. The companies are estimated to provide pasta like gluten-free, organic, whole wheat and Premium into the market. To conclude; mid-priced brands and private label products are expected to decrease the price of pasta with high added-value. It is considered that the pasta sales in 2010-2015 period will show a smaller growth compared to the 2005-2010 period. Consumers demand for whole wheat pasta with high fiber rate and low glycemic index and the ones produced from grains other than wheat. When Australian market is reviewed in terms of biscuit; it is seen that biscuit sales increased 4% in 2012 and the highest increase was realized in savory biscuits and crackers. Plain and chocolate covered ones are the mostly sold products in sweet biscuit category in 2012. As the consumers have limited their budgets, cookies have been the fastest growing product in the last 10 years. While cookie sales constituted 9% of total sales in 2002, this rate increased 17% in 2012. Innovations such as chocolate-filled, chocolate chip cookies are well received by consumers. Sweet biscuits constitute 60%, savory biscuits and crackers 40% of total biscuit sales. The most important company in the market is Australian Arnott’s Biscuits with approximately 70% share. Biscuit sales are projected to increase averagely 1% annually in 2012-17 period. It is estimated that there will be a change on the reasons for the customers to choose biscuits in 2012-17 period. Biscuit has become a product that is consumed in order to meet the diet needs of the consumers with health concerns and without much time rather than a snack consumed with tea in the afternoon. It is estimated that fortified/functional new products produced for the purpose of healthy living will put on the market and the demand for the biscuits produced as gluten-free for the people with food intolerance and the ones produced without using allergen ingredients such as nuts and peanuts will increase.
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