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Australia wheat yield to grow in volatile market

Australia wheat yield to grow in volatile market
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First Published: Tue, Aug 12 2008. 10 37 AM IST

New strains: A farmer inspects grains of wheat in Balliang, Australia. Wheat accounts for more than 60% of Australia’s foodgrain production. (Photo: Carla Gottgens/Bloomberg)
New strains: A farmer inspects grains of wheat in Balliang, Australia. Wheat accounts for more than 60% of Australia’s foodgrain production. (Photo: Carla Gottgens/Bloomberg)
Updated: Tue, Aug 12 2008. 10 37 AM IST
Sydney: After beating the odds to double the size of its wheat crop in the last 30 years, Australia is chasing further gains which some industry leaders say could yield exports as big as present world leader the US.
From satellite-guided tractors to drought-resistant wheat, the key lies in using technology to either give a fresh boost to yields that peaked 10 years ago, or expanding acreage beyond traditional growing areas.
New strains: A farmer inspects grains of wheat in Balliang, Australia. Wheat accounts for more than 60% of Australia’s foodgrain production. (Photo: Carla Gottgens/Bloomberg)
But success could increase market volatility as importers become more dependent on grain from one of the most drought-prone countries on earth, where climate change is likely to heighten the tendency for crops to bounce between feast and famine.
“If we get 25 million tonnes (mt) of wheat now in a reasonable year, given good rainfall, good farming practices, good varieties, we should be able to get to 35 (mt) over the next five to 10 years,” said Alan Umbers, an industry consultant backed by the government’s Grains Research and Development Corporation, or GRDC.
With exports of around 16mt from a normal crop of 25mt, Australia is already slightly ahead of Canada in most years as the world’s second biggest exporter. Another 10mt would put it on par with the US.
Climate change is the major threat to expansion, with weather officials forecasting more severe and more frequent droughts.
Further growth of Australian wheat production, which has more than doubled from the around 10mt a year in the 1970s and 1980s, can come from refinements of space-age technology, industry leaders say. By itself, technology could increase the crop by 10-15% within 10 years, said Peter Reading, chief executive of industry science lobby GRDC.
Recent advances include satellite-guided tractors that use every centimetre of available land by planting in perfectly straight lines. They also reduce the amount of time that needs to be spent working the fields, reduce fuel use by one-third and increase the speed of cropping.
Minimum tilling of the land, so that seed is planted in slim grooves cut into the soil, has also boosted efficiencies in water use, a vital innovation in the world’s driest inhabited continent.
Simply increasing the efficiency of water use could boost the grain crop by between 2mt and 14mt a year, according to a Bureau of Rural Sciences study done two years ago. Most of that would be wheat, which accounts for over 60% of Australia’s grain crop.
If Australia had had its 2006 drought in the 1980s, production of wheat would have been only 3.9mt instead of the 10mt actually produced, Reading says. “The ability through technology to be able to adapt is quite outstanding. I think we can continue to do that.”
The hope is that technology will keep improving productivity of Australian grains output. The federal department of agriculture has measured an average productivity growth of 3.3% a year for Australian grains between 1977 and 2002—one of the highest rates of any industry in the country and around the highest in the world for crops.
“Even if acreage didn’t expand, productivity growth would create...2-3% growth a year, over the next few decades,” said Mick Keogh, executive director of private think tank the Australian Farm Institute.
GRDC is focusing on developing drought-resistant strains of wheat, but is looking far beyond this for industry expansion. It is working to breed wheat that will thrive in higher rainfall, so that growing areas can be expanded. It is also adapting wheat for production in hot weather zones where the grain is not yet grown.
This does not involve genetic modification, which is more difficult for wheat than for other crops such as maize and soya beans. Reading believes that genetically modified wheat is at least 10 years away from introduction in Australia. “In terms of capacity to be able to produce the crop, provided the market is there, I’m quite excited,” he said.
Continued high food prices in world markets, fuelled by increased demand for protein in China, India and other emerging economies, will be the ultimate engine for expansion of the Australian wheat crop, industry experts say.
Garry Booth of brokerage MF Global sees more volatility for grains markets because of global warming, with swings in Australian crops accompanied by potentially major gains in cold countries such as Russia and the Ukraine but losses elsewhere.
Not that production in Australia isn’t already volatile. The worst drought in a century saw the crop slump from a peak above 26mt in 2003-04 to just over 13mt last year. “The consequence of global warming will be volatile production cycles, from drought to flood,” Booth said.
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First Published: Tue, Aug 12 2008. 10 37 AM IST
More Topics: Australia | wheat | market | US | GRDC |