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The cost of Australia’s bulk grain export supply chainsSub heading/////
Ukraine & Russia’s wheat industry: implications for Australia
Ross KingwellPeter ElliottPeter WhiteChris Carter
Russia, Ukraine and Australia
For more informationSeehttp://newsite.aegic.org.au/media/67471/aegic_ukraine_report_web.pdf
AlsoAEGICisreleasingaseparatereportonRussia inafewweeks.
Russia, Ukraine and AustraliaUkraine,RussiaandAustralia
What makes Ukraine and Russia internationally competitive wheat
exporters?
• A low cost of wheat production.• Large area of fertile soil.• A low cost supply chain.• Increasing wheat yields, biological resilience.• Large, nearby demand pull.• Technology and climate upside.
Russia, Ukraine and AustraliaUkraine,RussiaandAustralia
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Ukraine
Russia
Australia
Wheatyields(t/ha)
Russia, Ukraine and AustraliaUkraine,RussiaandAustralia
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
1990/1…
1992/1…
1994/1…
1996/1…
1998/1…
2000/2…
2002/2…
2004/2…
2006/2…
2008/2…
2010/2…
2012/2…
2014/2…
2016/2…
Ukraine
Russia
Australia
Wheatyields(t/ha)
Russia, Ukraine and AustraliaUkraine,RussiaandAustralia
Wheat yield trends
y=0.0855x+2.2273R²=0.37944
y=0.019x+1.542R²=0.04933
0
0.5
1
1.5
2
2.5
3
3.5
4
t/ha
Ukraine Australia
Russia, Ukraine and AustraliaUkraine,RussiaandAustralia
0
5,000
10,000
15,000
20,000
25,000
30,000
1990/1991
1992/1993
1994/1995
1996/1997
1998/1999
2000/2001
2002/2003
2004/2005
2006/2007
2008/2009
2010/2011
2012/2013
2014/2015
2016/2017
Russia
Australia
Ukraine
Wheatarea(‘000ha)
Russia, Ukraine and AustraliaUkraine,RussiaandAustralia
0
5,000
10,000
15,000
20,000
25,000
30,000
1990/1991
1992/1993
1994/1995
1996/1997
1998/1999
2000/2001
2002/2003
2004/2005
2006/2007
2008/2009
2010/2011
2012/2013
2014/2015
2016/2017
Russia
Australia
Ukraine
Wheatarea(‘000ha)
Russia, Ukraine and AustraliaUkraine,RussiaandAustralia
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Russia
Australia
Ukraine
WheatProduction(kt)
Russia, Ukraine and AustraliaUkraine,RussiaandAustralia
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Russia
Australia
Ukraine
WheatProduction(kt)
Russia, Ukraine and AustraliaUkraine,RussiaandAustralia
Areas sown to various crops
Wheat,13.3
Barley,3.7
Canola,2.4
Oats,0.8 Other,3.1
Australia
Wheat,23.0
Barley,7.5
Sunflower,6.4
Oats,2.8
Other,10.2
Russia
Areasowninmillionsofhectares
Russia, Ukraine and AustraliaUkraine,RussiaandAustralia
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Corn
Wheat
Sunflower
Barley
Soybean
Canola
Ukrainegrainproduction(kt)
Russia, Ukraine and AustraliaUkraine,RussiaandAustralia
RussianRoubledepreciation
Russia, Ukraine and AustraliaUkraine,RussiaandAustralia
UkrainianHryvniadepreciation
Russia, Ukraine and Australia
0
20
40
60
80
100
120
140
160
180
200
Australia USA Germany Canada Poland Russia Ukraine
EUR/t
Cashcosts Depreciation Opportunitycosts GrossRevenue
Attractive profit margins for wheat production in Ukraine and Russia
Source:Möllman (2015)
Russia, Ukraine and Australia
Supplychain cost:farmtoloadedatport
(AUD$/t)Australia 85Ukraine 57Russia 70Canada 113
Less costly supply chains
Russia, Ukraine and Australia
0
5
10
15
20
25
30
35
2013
/14
2014
/15
2016
/17
2021
/22
2026
/27
2031
/32
2033
/34
Wheat Barley Corn
Russia’sprojectedmajorgrainexports(mmt)
Source:UkrAgroConsult
Russia, Ukraine and Australia
Russia, Ukraine and Australia
Russia, Ukraine and Australia
Russia, Ukraine and Australia
Top15DestinationsforUkrainianGrainFiveyearaverage2010-2014
Russia, Ukraine and Australia
Top15DestinationsforUkrainianGrainTwoyearaverage2013-2014
The cost of Australia’s bulk grain export supply chainsSub heading/////
Implications of these trends for Australia’s wheat export industry
Russia, Ukraine and Australia
2. Theirgrainlogisticsnetworksaremodernising.
Understandthethreat
1. RussianandUkrainianwheatexportsareincreasing.
4. BlackSeawheatisdisplacingAustralianwheatinprice-sensitivemarkets(e.g.MENAregion).
3. BlackSeawheatisincreasinglygainingacceptancebyflourmillsinAustralia’skeyAsianmarkets.
5. RapidlygrowingAsianmarketscancontinuetoacceptAustralianand BlackSeawheat,eventhoughAustralia’smarketshareinsomeofthoseAsianmarketsislikelytodecline.
Russia, Ukraine and Australia
1. AustralianwheatgrowerscanbenefitfromgrowthinAsianconsumptionofwheat,AND we’llbenefitmoreifweknowwhyAustralianwheatisvaluedindifferentAsianmarketsegments;andifwecommunicateandactonthatintelligence.
Understandtheopportunity
3.Matchinstitutioncompetition,whereworthwhile.AustralianwheatfacesnotonlypricecompetitionfromBlackSeawheatbutalsoinstitutionalcompetitionfromCanadaandtheUSA.
2.EnsurewemonitortheBlackSearegion.It’sbecomingtheworld’smostimportantwheat-exportregion,It’sresponsibleforabout30percentofglobalwheatexports.Itschangesinwheatproduction(duetoclimate,technology,politicsorpolicy)
willinfluence theinternationalwheattradeandtherebydirectlyorindirectlyaffectAustralianwheatexports.
The cost of Australia’s bulk grain export supply chainsSub heading/////
Thank You