World Grain - June 2014 - 64

Sumba

Timor

Kupang

TIMOR

Torres Str.

Port Moresby
S o l o m o n

T i m o r

Guadalca

S e a

Darwin

FEATURE

S e a

G u l f
o f

G
G
G
G
G
G
G

I n d i a n

r e

C a r p e n t a r i a

Opportunities
B

Wellesley
Islands

i e
r r

O c e a n

Cairns

C o r a

Derby

Broome

f
f
f
f
f
f
f

Tennant Creek

Port Hedland

Mount Isa

Mackay

Learmonth

and
Alice Springs

Carnarvon

Gladstone

Fraser

A U S T R A L I A

Geraldton

challenges
Brisbane

Bourke

Perth

Darling

Cook

Kalgoorlie

Broken
Hill

Port Augusta

G r e a t

A u s t r a l i a n

B i g h t

Murray River

Adelaide

Port Lincoln

ive

rra

Sydney

Canberra

Kangaroo
Island

Melbourne

he challenges and opportunities confronting Australia's
growers in the years to come are many and varied.
Asia's swelling middle classes are demanding more
meat, bread and noodle products, creating huge new markets
for millers and farmers. And for many buyers, Australia's reputation for quality and its ocean freight advantage makes it a
shoo-in as ﬁrst choice supplier.
However, Australian growers also face huge pressure. Many
feel they lack the government support available to rivals in the
U.S. and Canada and suffer from outdated infrastructure and
logistics systems. Grower proﬁts - where they are generated
120˚E
at all - are under increasing pressure from 130˚E
buyers, marketers
and bulk handling companies. And low margins make it more
difﬁcult to invest in market research and technology to generate output and yield gains, and to communicate effectively
with customers to ensure the varieties planted match the needs
of rapidly changing markets.
"The Australian Governments - federal and state - don't
bother much about agriculture," said WA Grains Group
(WAGG) executive Ray Marshall. "You only have to look at
our third world transportation infrastructure. We have some of
the highest supply chain costs in the world. We cannot compete against our competitors."
WAGG is a self-funded grower group set up in 2007,
prior to the liberalization of the Australian grain industry a
year later, as an alternative to traditional state agricultural
lobby groups. According to Marshall, the Australian agriculture sector's combined debt based on Reserve Bank of
Australia ﬁgures was A$64 billion in November last year,
compared to A$30 billion in 2003.
64

T a

by Mike King

Australian grain growers well
positioned for success, but many
obstacles remain to gain market share
Tasmania

Hobart

HIGH COST OF PRODUCTION
Part of the reason for mushrooming debt is that growers
140˚E
150˚E
in Australia face ever increasing red tape: truck audits, ﬁrearm licenses, fork lift tickets, compliance charges, stamp duty,
high payroll and carbon taxes, work safety costs and chain of
responsibility regulations.
"Government policies have been the main cause of our
inability to compete," said Doug Clarke, WAGG chairman.
"Government has put in policies on wages, welfare, superannuation and tax that have made agriculture unsustainable.
"The cost of producing wheat in Australia is double that
of Argentina, Russia and Ukraine. Australian agriculture has
the highest costs, lowest yields and most volatility in weather.
With increasing rural debt, this is decreasing the ability of
farmers to replace infrastructure."
Dr. Michael Southan, general manager for Grower Interests
at GrainGrowers, a country-wide, member-based grain producer organization, also believes that many Australian farmers are being weighed down by costs of production far higher than in rival production areas such as the Black Sea. "We
have very little ﬁnancial assistance and costs such as land,
June 2014 / World Grain / www.World-Grain.com

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World Grain - June 2014

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