20 - Export growth prospects for Australian wheat
Ross Kingwell - Chief Economist, AEGIC
Where are Australia’s best prospects for its wheat exports?
The International Trade Centre (ITC) is a joint agency of the World Trade Organization and the United Nations. The ITC focuses on expanding trade opportunities whilst fostering sustainable development. One of its information products identifies the export growth opportunities for various commodities and for various countries. In the case of wheat exports from Australia, the ITC identifies that Australia’s top-10 current markets are mostly in South East Asia being Indonesia, Vietnam, Thailand and the Philippines; as well as in East Asia being Japan, Korea and China (see chart 1).
The ITC analysis of supply and demand is based on trade flows during 2012–2016, projected into 2021 using expected per capita GDPs of countries between 2016 and 2021. However, there are competing suppliers to all these markets. Take the case of the market with the greatest potential to receive Australian wheat exports; Indonesia.
The countries with the greatest potential to export wheat to Indonesia are Australia, the United States of America and the Russian Federation. Australia shows the largest absolute difference between potential and actual exports in value terms, leaving room for Australia potentially to realise additional exports worth $767 million (see Chart 2 ).
Of course, whether or not Australia actually captures its potential growth in sales of wheat to Indonesia and other countries listed in Chart 2 is conditional on many changeable factors over the next several years. Changes in exchange rates and climate shocks in wheat exporting and wheat-producing regions can play havoc with projections of export volumes and market shares. However, based on trends apparent from 2012 to 2016, serving the wheat markets in South East Asia and East Asia is crucial for the prosperity of Australia’s wheat industry towards the 2020s.
Towards the 2020s the key message is: focus on our nearest and dearest.
Markets nearest to Australia should be held dearest in the hearts of those exporting Australian wheat as they are our greatest source of new, additional value.
For a more in-depth look at the Indonesian opportunity, grab your free copy of our latest report - The Indonesian Wheat Market - Its strategic importance to Australia and the accompanying Fact Sheet (Click images to download)