Australia's biggest individual grain grower is boosting on-farm storage for his 2008/09 wheat harvest, hoping to maximise earnings by direct sales to end users as prices languish near 15-month lows. Ron Greentree, who expects to harvest a 150,000-tonne wheat crop this season, said in an interview the extra capacity was needed as weak prices meant he was in no hurry to sell his crop.

 

He said buyers were struggling to arrange credit because of the global financial crisis while the world was awash with wheat following bumper northern hemisphere crops. "As far as Australia's harvest is concerned, this financial crisis couldn't have come at a worse time because it is really difficult for the buyers to get credit on the right terms," said Greentree.

 

Troubled financial markets and ample supplies have weakened prices as Australia's 2008/09 wheat harvest, expected to be about 20 million tonnes, moves into top gear. The world's second-largest wheat exporter has deregulated its wheat industry and, for the first time in over 60 years, farmers such as Greentree have a choice of who they will sell to and when.

 

Greentree, who operates four properties with a combined area larger than Singapore, at 82,000 hectares, is avoiding grain traders, selling direct to end-users. "We're adding storage because of deregulation," he said. Greentree has already made several trips to Japan this year, marketing his wheat to flour-millers needing high protein wheat for the manufacture of ramen noodles. He also expects sales to Vietnam and Thailand.

 

While sales deals have been struck, pricing and a delivery timetable have not been set, requiring Greentree to boost on-farm storage to about 100,000 tonnes. Sales are likely to be slower than normal as millers in Japan have cut back in the size of shipments.

 

"It always used to be a 20,000-tonne cargo to Japan, that might have been split between several different flour mills, but we're now seeing they just want bids on 1,000 to 4,000 tonnes at a time as they're trying to be conservative with their money," said Greentree.

 

Even major traders faced issues relating to access to capital on acceptable terms, he said. "I'm not saying that any trader is in trouble - it's just difficult getting access to money on the right terms because of the credit crisis," he said.