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Drought forces grain giant Australia to import wheat

A cargo ship docked at a port south of Sydney last month carried a highly unusual product: wheat.

The shipment from Canada was a surprising event for Australia, which has long been one of the world’s biggest grain suppliers.

But a severe drought in eastern Australia has caused a sharp decline in exports and supplies. Australia’s grain crop last year fell 20 per cent to 30 million tonnes. This included 17 million tonnes of wheat, the lowest in a decade.

The country’s wheat exports last year were worth A$4.1 billion (S$3.9 billion), a 33 per cent drop from the previous year.

The poor grain supply is affecting the farming sector, making it harder and more expensive for many farmers to feed cattle and other livestock.

Australia’s farming sector contributes about 3 per cent to the total economy, with two-thirds of its agricultural output sold overseas. More than half of the agricultural exports go to eight big Asian buyers, including China, Japan, Indonesia and Singapore.

An analysis by Rabobank last month said low rainfall and continued dry weather meant that Australia will produce about 18 million tonnes of wheat next year, slightly more than last year but well below the average.

“The hottest summer on record and below-average rainfall – on top of two years of below-average rainfall – means large areas are experiencing well-below to the-lowest-on-record root-zone soil moisture,” said Rabobank analyst Cheryl Kalisch Gordon. “There has been no widespread autumn break (in the dry weather) in most areas.”

Federal government figures show the value of Australia’s total farm output is expected to drop 3 per cent next year to A$59 billion.

About 97 per cent of New South Wales, the country’s most populous state, is experiencing drought. This prompted the state government to announce last week an A$800 million relief package for farmers.

The fall in wheat supplies has affected local prices, though international prices have remained relatively low due to high global supply. It has also led to controversial foreign imports of wheat.

The first shipment of about 57,000 tonnes arrived in Port Kembla last month, marking the first grain importation since 2007. The wheat is due to be processed by Manildra Group.

The company, which produces food and is a major flour maker, said it had never before had to import wheat in its 67-year history.

Some farmers have raised concerns about the imports, saying they posed a biosecurity threat and could introduce pests and weeds.

A petition launched by farmer Georgina Warne from the state of Victoria to try and block the imports has received almost 8,000 signatures. She cited the biosecurity risk but also said that imports could lead to lower local prices and make it harder for individual farmers to survive tough drought conditions.

“The machinations of this extend beyond this year and could have serious consequences for our… farm profitability moving forwards,” she said in her petition.

“This will add more pressure to regional communities, requiring further government assistance, depleting land values and longer-term production security.”

The government said it had conducted an extensive assessment of biosecurity risks before approving grain imports.

The Department of Agriculture said in a statement that the shipment of wheat from Canada “will be subject to strict transport and processing conditions to manage any biosecurity risks”.

Low wheat supplies have forced farmers in the country’s drought-ravaged east to transport feed from Western Australia, which has experienced good conditions and bumper crops.

But this has added heavily to the costs for farmers who need the grain to feed livestock.

A farmer in New South Wales, Mr Chris Groves, said he usually produced enough feed to sell to other farmers. But volumes were down by 80 per cent compared with 2016, forcing him to use the fodder for his own herd of cattle.

“We’ve had to spend enormous amounts of money just to keep our cattle alive,” he told The Australian newspaper on June 19. “The grass just doesn’t grow.”
Source: The Straits Times

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