Australian wheat exports to Asia soar as tastes change


Changing diets, the rise of the middle class and high birth rates in near neighbours including Indonesia, Vietnam and India are fuelling new demand for Australian wheat and flour exports.

Australian wheat flour has become the preferred choice of bakers and noodle makers in Southeast Asia, transforming the region into Australia’s biggest wheat export market.

Indonesia is now Australia’s biggest wheat customer, followed by Vietnam, The Philippines, Malaysia and Thailand, as more westernised, urbanised and busy young Asians add more bread, cupcakes, sweet buns, desserts and instant noodles to their daily diet.

It’s a big change from a decade ago, when our export focus was on Middle Eastern customers in Yemen, Iran, Iraq and Egypt.

The rapid growth in wheat demand comes at a good time for Australian farmers, after last year’s biggest-ever wheat harvest of 35.1 million tonnes was marred by low prices and a global glut.

But world wheat prices are now rising — and have surged an unexpected 20 per cent in the past two months — as global wheat stocks deplete. It’s encouraging growers of last year’s bumper crop, who had held back stock, to start selling.

And it is now predicted a record-smashing 24.5 million tonnes of wheat will be exported from Australia this year.

Indonesia has already bought 3.37 million tonnes of wheat up until July — 82 per cent of its annual average purchases over the past five years — while India has plunged into a market where five years ago it was not even a presence, buying 1.76 million tonnes of Australian wheat in the past six months.

The Philippines has jumped to become Australia’s third-biggest market this year, followed by Vietnam and China.

In The Philippines, a new $US30 million ($37.8m) flour mill half-owned by Australian wheat farmers, through the Interflour Asian joint venture, this week began turning out flour to meet the booming local demand for bread and sweet biscuits.

It’s a situation repeated across Southeast Asia, China and India, where the traditional rice and rice noodle diet is giving way to cheaper and more convenient wheat flour instant noodles.

At the same time, young consumers with more westernised diets and sweet tooths are eating bread, sweet buns, cupcakes, doughnuts and biscuits like never before.

In Vietnam, the humble local baguette or banh mi is a key driver of Australian wheat exports, while noodles in Vietnam are almost exclusively made from Australian wheat.

Greg Harvey, Australian chief executive of the Singapore-based Interflour milling group, said prospects were bright for Australian wheat exports, with flour consumption growing at a phenomenal 6-8 per cent a year in developing markets such as Indonesia, Vietnam and The Philippines.

The $680m Interflour Group — half-owned by WA grain grower co-operatives CBH and Indonesia’s powerful Salim family — owns 10 flour mills across Southeast Asia, including its newest one at Subic Bay, and is now Southeast Asia’s second-biggest flour merchant.

Its mills process 2 million ­tonnes of wheat annually — about 70 per cent bought from Western Australia, as its ports are closest to its Indonesian, Malaysian and Vietnamese flour mills and enjoy a freight advantage.

Mr Harvey said this week that of the 1.2 million tonnes of flour Interflour sells each year in Southeast Asia, about 60 per cent was used to manufacture both wet and instant noodles. But one third of flour is used for bread, cakes and pastries, where demand is growing at 10 per cent annually.

“Australian wheat is the preferred choice of bread flour makers and manufacturers here because, while it is a bit more expensive, it’s white wheat and the varieties suit Asian breads,” Mr Harvey said.

“The flour market here is growing at 6 per cent per annum but productivity growth on their farms is only 1 per cent.”

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