AUSTRALIAN wheat farmers will face an increasing challenge keeping up with their neighbours’ appetite for bread and noodles.
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Demand from Indonesia, the Philippines and three other Southeast Asian nations is set to jump 40 per cent to 13.2 million tonnes by 2020, said Greg Harvey, chief executive officer of Interflour Group, one of the region’s biggest flour millers.

That may outpace Australia’s ability to supply the wheat variety used in soft bread and noodles, he said in an interview in Singapore. Australia is the world’s fourth-biggest wheat shipper.

Faster growthFaster growth and an expanding population are boosting consumption of everything from wheat and sugar to cooking oils in the region, which has more people than the European Union. Indonesia will become the world’s second-largest wheat importer this year and has overtaken India as the top user of palm oil, the US government estimates. The US, Canada and Russia could fill any shortages in Australian supply, he said.

“It’s a bullish story for Australian wheat,” said Harvey, whose company is a venture between Salim Group in Indonesia and CBH Group, Australia’s biggest grains shipper.

“There will be more demand in 2020 than the ability to supply, at least on paper. That’s a good problem to have.”

Wheat in Chicago entered a bear market last month as world stockpiles of grains excluding rice head for the highest since mid-1980s, the International Grains Council estimates. Prices fell 13 per cent this year to $US5.1575 a bushel on Wednesday.

Hottest springWestern Australia and South Australia, which are top producers of the low-protein white wheat used in noodles and soft bread, are the country’s main suppliers to south-east Asia, Harvey said.

His projections assume that farmers will have difficulty increasing exports from the 11.1 million-ton annual average over the past five years.

Dry weather and limits on the amount of land suitable for cultivation are already curbing supplies.

Total wheat shipments from Australia may drop 7.2 per cent to 16.99 million tons in the 12 months to June 30, the lowest in five years, after the hottest spring on record, according to the Australian Bureau of Agricultural and Resource Economics and Sciences.

While wheat imports by south-east Asian countries from all origins will reach 17.75 million tons in 2014-2015, or 8.6 per cent more than the average in the past five years, exports from Australia are estimated to be 8.2 per cent below the five-year average, US Department of Agriculture data show.

“We have a productivity growth rate at about 1 per cent a year and I hope this will continue,” said Simon McNair, chief executive officer at Australian Grain Growers Co-Operative. “There’s a finite amount of farmlands. There’s competition from other agricultural products like cattle, and other crops.”

Rising consumptionSouth-east Asian nations are still expanding. The International Monetary Fund forecast last month that growth in the five biggest economies will accelerate to 5.2 per cent in 2015 and 5.3 per cent in 2016, from 4.5 per cent last year.

Demand for wheat flour will increase at the fastest pace in Indonesia, Vietnam and the Philippines, with the average exceeding 7 per cent a year in the decade through 2020 according to Interflour’s Harvey. Consumption per person in the region will climb to 29 kilograms in 2020 from 20 kilograms last year, he said.

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