While Australia’s overall grain and oilseeds production has lifted markedly over the past 60 years, the change of the overall mix of grains and oilseeds provides a strong picture of the sector’s future direction.
Sixty years ago wheat retained its historical role as Australia’s major crop. Over the decades, this percentage has continued to fall, from around 80 per cent of the overall crop to around 55 per cent.
Of the other major crops, the largest growth has been in barley production. Fifty years ago barley production was 10 per cent of wheat production, while last year it had reached half the level of Australia’s wheat production.
While the overall share of canola is less, its growth continues to be strong. From almost nothing 30 years ago, domestic canola production rose last year to almost twenty percent of that of wheat.
The scale of the challenge to Australia from major export competitors is further emphasised in a comparison of yield growth over the past few decades.
On its own, yield growth could be regarded as an inexact science, as climatic and growing conditions vary markedly by country and by region. In addition, many developing countries which have more recently accessed agricultural technology and new investment are more likely to be coming off a low base.
Since 2000-01, the average global wheat yield is estimated to have increased by around 30 per cent, from 2.7 tonnes per hectare to a forecast 3.5 tonnes per hectare in 2019-20. In comparison, wheat yields in Australia grew around 5 per cent over the same period, from 1.8 to 1.9 tonnes per hectare, USDA data suggests.
At the other end of the scale, yield growth in some of Australia’s export competitors in the last twenty years has been spectacular. In Russia, Ukraine and Kazakhstan, yields have risen by 74 per cent, 109 per cent and 37 per cent respectively. Even Argentina has seen yields grow by 30 per cent over the same period.
Both the Black Sea region and Argentina arguably benefit from mostly highly productive soils, as well as less challenging climatic conditions than Australia. But a large degree of their recent yield growth can be attributed to enhanced farm management practices, boosted by new investment, as well as governments keen to stimulate their grain industries to maximise opportunities from demand.
For producers in South America and the Black Sea region, a lack of major domestic markets, either in scale or demand, further indicates the likelihood of growing export volumes on world markets.
In terms of global grains and oilseeds trade flows the major South American and Black Sea producers have lifted their market share from 33 per cent to 53 per cent over the past 15 years.
Michael Whitehead is Head of Agri Insights and Viveka Manikondais a Senior Associate, Institutional at ANZ
This article was originally published on ANZ Institiutional's website. Click to read the full article: Gains, trade & grains