Australia is so low on high protein wheat that it is importing product from the country it usually competes with in export markets.
Australia’s Department of Agriculture and Water Resources has issued three permits for shipments of bulk wheat from Canada and there are more in the queue.
“It’s an exceptional event,” said Bruce Burnett, director of markets and weather with Glacier FarmMedia’s MarketsFarm.
It could be a recurring event if a forecast from the Australian Bureau of Meteorology proves accurate. It predicts another dry winter in eastern and southern Australia.
“If this forecast does come to pass it’s going to be pretty grim for them,” said Burnett. “There will be limited competition from Australia if this does happen.”
The three import permits that have been granted are part of 11 applications to import bulk grain from the United States and Canada including canola, wheat, corn and sorghum. The applications are in varying stages of the review process.
The company that imported the Canadian wheat has come under fire from Grain Growers, which bills itself as the national voice of Australian grain farmers.
The association wrote a letter to the secretary of the Department of Agriculture expressing its dismay over the import permits.
“Of critical importance is biosecurity and maintaining Australia’s position as a producer of agricultural commodities without the burden of many of the pests, weeds or diseases that plague overseas countries,” said Grain Growers chair Brett Hosking.
He said the import of the Canadian wheat by Manildra Group, which is the largest buyer of Australian wheat, has caused “significant concern” in the country’s grain sector.
“We understand that the decision to import grain reflects tight supplies owing to the devastating 2018 east coast drought,” said Hosking. “However, there is discussion with the grain industry regarding whether Australia’s grain supply is currently adequate to meet domestic demand requirements.”
John Honan, managing director of Manildra Group, wrote an open letter to Australia’s grain growers explaining the decision to import high protein wheat from Canada.
He said it was the first time in the country’s 67-year history that it has been forced to import wheat, blaming it on back-to-back droughts in eastern Australia.
“This has left a shortfall of high protein wheat required for our value-added exports, including gluten and starch produced at our Nowra, New South Wales, plant,” said Honan.
“We have safeguarded the future of our plant by importing high protein wheat and we have an ongoing requirement to continue this through the end of calendar 2019.”
Burnett said the bulk of the country’s wheat is grown in Western Australia but the high quality, high protein wheat that is similar to Western Canada’s hard red spring wheat is grown in Queensland and northern New South Wales.
Those two states are in eastern Australia, which has experienced two consecutive years of drought.
Millers like Manildra could use some of the wheat grown in Western Australia but product moving from one Australian port to another has to move by a domestic carrier, which is expensive.
As well, it is difficult to ship grain across country by rail because each state uses a different gauge of steel.
Burnett said Canada could gain market share in lucrative markets like Japan if Australia’s drought lingers.
The Australian Bureau of Meteorology expects the Indian Ocean Dipole to move into a positive phase in June and persist until spring. That will have a bigger impact on Australia’s weather than El Nino.