MELBOURNE, AUSTRALIA — The Australian grains industry will struggle to take advantage of further export opportunities to Asia if Australian state and Federal governments continue to neglect rail, said Emerald Grain Managing Director John Murray during the Food and Fibre Asia Summit in Melbourne, Australia on Oct. 30.
“Australia only accounts for three per cent of the world’s wheat production. We have done incredibly well to secure the market share into Asia that we have,” he said. “Rest assured, grain origins like the U.S., South America and even Canada and the Black Sea are all vying for a piece of the pie – or noodle bowl. Unless we figure out how to get our grain from the farm gate to the port more efficiently, we will not be able to provide the value, or the security of supply, that our Asian customers are looking for.”
He said it was disappointing that many of Australia’s grain lines had not seen significant investment since the early 1900’s when they were built.
“Due to axle load limits, short rail sidings, different gauge sizes, and a generally neglected network, the journey to port is slow and inefficient,” Murray said. “We are loading 40 wagon trains with a capacity per wagon of less than 60 tonnes. In Canada, they can load 100-wagon trains at 100 tonnes per wagon.
“The Victorian government recently committed some money to the standardization of rail lines, which has been welcomed with open arms by the grains industry. But we need a long-term vision from state and federal governments in order to improve more grain lines so we can compete into Asia for the next 50 years – not just until the next election.”
Looking to prospects abroad, he said the Philippines presented an excellent export opportunity for the grains industry.
“A recent HSBC Global Economics report pegged the Philippines as the 16th largest economy in the world by 2050. It will be leapfrogging the growth of nearly 30 other nations to get there,” he said. “The Philippines’ demand for grain reflects this growth, jumping nearly 25 percent when compared to the previous decade. Yet Australia does not have strong market share into the Philippines relative to other South East Asian nations – for the 2013-14 season we had just under 20 percent.”
Murray also warned delegates that Australia needs to think about its production capacity. Since the 1960s there has been an upward trend in grain production, he said, but he’s not sure how much more can be done to continue that growth.
“It might be time to start looking at value over volume. We should make sure we can target niche, high value markets, and create efficient supply chains, in order to help growers and industry extract more dollars per tonne from grain exports,” Murray said.