The pandemic caused labour shortages which reduced the ability of supply chain points - including land distribution and shipping – to run at their normal capacity. These disruptions led to concerns in many importing countries that their grain supplies may run low – a situation which could lead to widespread hunger and social unrest.
Similarly, following the start of the conflict in Ukraine, there were global fears the loss of Ukrainian grain from world markets – as well as that of Russia due to sanctions – would have a similar food security impact in many countries.
While these fears did not eventuate, a number of markets have subsequently taken steps to ensure they do not face the same food shortage concerns again. This includes building larger grain storage reserves as well as diversifying the number of countries from which they import.
While Australia was already one of the world’s largest grain exporters, these changes have further boosted the country’s standing globally. Australia is seen as a trusted trade partner with low political risk.
Despite the impact of drought during some seasons, Australia is also regarded as being a relatively reliable supplier of export volumes. As a result, more countries have looked to import greater volumes from Australia.
Across the world, the consumption of grains and oilseeds continues to rise strongly, driven by growing populations and incomes. In addition, increased dairy and meat consumption has a corresponding effect on the demand for grain as feed.
While food and feed remain the main uses for grains and oilseeds, the Australian industry is actively pursuing new opportunities for its products. In particular the industry is looking to boost production of biofuels made from oilseeds, especially canola, sunflower and soybeans.
A major focus will be an increase in the production of biofuel for aviation use, as many of the world’s airlines look to sustainable aviation fuel (SAF) as a means of cutting emissions.
For Australian companies there will be enormous potential not only to provide SAF to domestic airlines, but also across the globe.
At the same time, stakeholders across the grain supply chain are also working to identify opportunities related to changes in sustainability practices, regulations and commercialisation.
For grain farmers, this could include new methods to reduce carbon emissions from their farms and exploring charging a premium return on lower carbon or carbon neutral grains.
These improvements will be aided by the rapid uptake in the utilisation of agtech by many farmers – everything from reducing fertiliser and pesticide usage through targeted application technology to increasing the drought tolerance and yield potential of crops through enhanced seed genetics. In addition, bringing artificial intelligence to farms will increase efficiency, productivity and profitability.
For the entire Australian grain supply chain – including farmers, grain handlers, exporters and processors – the long-term outlook only gets stronger.
Sara McCluskey is Head of Diversified Industries at ANZ Institutional