Chapter 2.1
Grain industries
2.33 The wheat and rice industries are two of Australia's most significant
grain producing sectors. [37]
Wheat
2.34 It was expected that during 1995-96 Australia would produce about
17 million tonnes of wheat. This figure is expected to reach 17.4 million
tonnes in 1996-97. During 1996-97 plantings are forecast to increase some
0.4 million hectares to 10.3 million hectares. [38]
Role of the Australian Wheat Board (AWB)
2.35 To gain an understanding of value-adding in the wheat industry
it is necessary to appreciate the role played by the Australian Wheat Board in the
industry. Any discussion of Australia's wheat industry and value-adding in that industry
has to involve the Australian Wheat Board because of the dominant role it plays in the
industry. The AWB is a statutory marketing monopoly for the industry. It owns and sells
all Australian export wheat and plays a role in supporting value-adding in the industry.
2.36 The 1982 Wheat Marketing Act has been amended to clarify and
enhance the role of value-adding activities by the AWB. The inquiry was told that in the
amendments to the Act “value-adding activities” were defined as:
Activities that increase the value of grain or grain products and includes
the processing of grain or the plant from which the grain is obtained,
or the manufacture of products from grain or the plans from which grain
is obtained, and the promotion of those activities. [39]
2.37 The AWB has interpreted these amendments as being “activities
which increase the income of grain producers by permitting direct access
to profits from the processing, or transformation, of the products from
the grain plant”. [40]
2.38 The Board is not involved in many commercial activities in the domestic
market. It is primarily concerned with promoting the export of Australia's
wheat which has involved it in supporting offshore processing and manufacturing
operations using Australian wheat. [41]
These support activities have involved the establishment of a demonstration
bakery in China and the construction of wheat storage facilities in Egypt.
[42] The Board has also invested about
US$2 million in a flour and feed milling operation in Tianjin, China and
proposes to invest $4 million in Vietnam flour mills in a joint venture.
[43]
Flour exports
2.39 The changing nature of value-adding in the wheat industry is demonstrated
by the increasing shift from the export of flour production to the export
of bulk wheat. Despite support in the gains industry for the processing
of wheat in Australia for export, as expressed at the Grains 2000 conference
held in 1991, hundreds of flour mills have closed down in Australia in
recent years. These mills closed because overseas buyers want to buy wheat
in bulk not in the form of flour. [44]
Flour exports fell by over 90 per cent between 1952-53 and 1990-91. As
of 1993 cereal and flour preparations, including starch and gluten, accounted
for only 0.5 per cent of Australia's merchandise exports. [45]
Rice
2.40 The rice industry in Australia is one of the success stories of
Australian agricultural production. The success of the industry is examined in this
section along with the role played by the Ricegrowers' Co-operative (RCL) in contributing
to this success.
2.41 Australian rice production is projected to increase by 9.1 per cent
to 1.33 million tonnes in 2001-01. It is predicted that rice plantings
will increase by 3.7 per cent to 140 000 hectares in the same year while
yields are projected to increase from 9 tonnes per hectare in 1995-96
to 9.5 tonnes per hectare. [46]
Success of the industry
2.42 There are approximately 2 130 rice farms in Australia with the industry
concentrated in NSW. The rice industry has a NSW Sate marketing board
and a successful cooperative, the Ricegrowers' Co-operative (RCL) that
is 100 per cent owned by 2 000 farmers. The Committee understands that
the Co-operative turned over just under $600 million in 1994 and presently
employs about 1 400 people in Australia and 350 overseas. In recent years
the RCL has concentrated on developing niche markets and increasing value-adding
to rice. This has resulted in the trade in branded rice products increasing
significantly. Previously most Australian rice was exported in unbranded
bulk packs. [47] It is considered that the development of
brand names has assisted Australian rice to secure its place in international
and domestic markets. [48] Eighty-five per cent of the rice marketed
through RCL is exported, most of which is exported in a value-added form.
Mr James Kennedy, General Manager of RCL, told the inquiry:
No other country exports such a high proportion of its rice crop as
we do, and no other country exports significant amounts of rice without
government subsidy. [49]
2.43 Since 1976 consumption of rice in Australia has grown by more
than 300 per cent to 7.57 kg per capita a year. Domestic consumption of rice, which
accounts for around 25 per cent of domestic production is projected to increase by 20 per
cent between 1995-96 and 2000-01. One observer has suggested that:
The rice industry is a shinning example of what farmers can achieve
through value-adding and brand names. Rice has been transformed from
a simple commodity into a multipurpose product. [50]
Initiatives of Ricegrowers' Co-operative
2.44 The Ricegrowers' Co-operative took a series of initiatives over
the years to promote the consumption of Australian rice in the domestic market and
overseas, including:
- the development of new brands to increase market penetration and
block competitors;
- extending ownership and control over its product by adding more value
to it, for example through packaging and marketing activities in Australia and overseas;
- the development of new rice products, such as rice cakes;
- carrying out intensive research and development activities dealing
with most aspects of rice production and consumption; and
- preparations to break into the Japanese rice market through activities
such as hosting visits by Japanese groups and developing rice to meet
Japanese requirements. [51]
2.45 The Committee understands that the Australian rice industry expects
to achieve a 25-33 per cent share of Japan's rice import market. The Committee
understands that Australian rice producers are continuing to develop higher
quality japonica rice to meet the tastes of Japanese consumers. [52]
Footnotes
[37] For information on the international
grain market, including barley, see R. Rees and others, Outlook for Food Grains,
Outlook 96, Vol. 2, Agriculture: collection of papers delivered at the Outlook 96
Conference held in Canberra 6-8 February 1996, organised by ABARE, pp. 281-297.
[38] R. Rees and others, Outlook for
Food Grains, Outlook 96, Vol. 2, Agriculture: collection of papers delivered at the
Outlook 96 Conference held in Canberra 6-8 February 1996, organised by ABARE, pp. 281,
289.
[39] Evidence, AWB, p. 68.
[40] Evidence, AWB, p. 68.
[41] Nigel Austin, The Universal Farm,
Bulletin Magazine Vol. 112, 27 March 1990, pp. 118-119. For a description of a possible
joint project using Australian wheat with Chinese interests in Shenzhen see Florence
Chong, Trading Policies: Trading Costs of Value-adding, the Australian newspaper,
16 June 1993, p. 29.
[42] Department of Primary Industries and
Energy, International Agribusiness Trends and Their Implications for Australia, a
discussion paper prepared for the Primary and Allied Industries Council, Canberra, 1989,
p. 40.
[43] Evidence, AWB, pp. 69-70.
[44] Florence Chong, Trading Policies:
Trading Costs of Value-adding, the Australian newspaper, 16 June 1993, p. 29; see also
Department of Primary Industries and Energy, International Agribusiness Trends and
Their Implications for Australia, a discussion paper prepared for the Primary and
Allied Industries Council, Canberra, 1989, p. 41
[45] Ray Block, Creating Value-added
Industries, AIESEC Forecasting the Australian Economy 1993, p.12.3.
[46] R. Rees and others, Outlook for
Food Grains, Outlook 96, Vol. 2, Agriculture: collection of papers delivered at the
Outlook 96 Conference held in Canberra 6-8 February 1996, organised by ABARE, p. 292.
[47] Department of Primary Industries and
Energy, International Agribusiness Trends and Their Implications for Australia, a
discussion paper prepared for the Primary and Allied Industries Council, Canberra, 1989,
p. 47; Evidence, Ricegrowers Co-operative, p. 962
[48] Nigel Austin, The Growing
Revolution, Bulletin Magazine Vol. 113, 16 July 1991, p. 92.
[49] Evidence, Ricegrowers
Co-operative, p. 962.
[50] Nigel Austin, The Growing
Revolution, Bulletin Magazine Vol. 113, 16 July 1991, pp. 91-92 and R. Rees and
others, Outlook for Food Grains, Outlook 96, Vol. 2, Agriculture: collection of
papers delivered at the Outlook 96 Conference held in Canberra 6-8 February 1996,
organised by ABARE, p. 292.
[51] Department of Primary Industries and
Energy, International Agribusiness Trends and Their Implications for Australia, a
discussion paper prepared for the Primary and Allied Industries Council, Canberra, 1989,
pp. 47-48.
[52] R. Rees and others, Outlook for
Food Grains, Outlook 96, Vol. 2, Agriculture: collection of papers delivered at the
Outlook 96 Conference held in Canberra 6-8 February 1996, organised by ABARE, pp. 284,
292.