ukraine & russia’s wheat industry: implications for australia · 2016. 8. 1. · 2013/14...

The cost of Australia’s bulk grain export supply chainsSub heading/////

Ukraine & Russia’s wheat industry: implications for Australia

Ross KingwellPeter ElliottPeter WhiteChris Carter

Russia, Ukraine and Australia

For more informationSeehttp://newsite.aegic.org.au/media/67471/aegic_ukraine_report_web.pdf

AlsoAEGICisreleasingaseparatereportonRussia inafewweeks.

Russia, Ukraine and AustraliaUkraine,RussiaandAustralia

What makes Ukraine and Russia internationally competitive wheat

exporters?

• A low cost of wheat production.• Large area of fertile soil.• A low cost supply chain.• Increasing wheat yields, biological resilience.• Large, nearby demand pull.• Technology and climate upside.

Russia, Ukraine and AustraliaUkraine,RussiaandAustralia

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

Ukraine

Russia

Australia

Wheatyields(t/ha)

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0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

1990/1…

1992/1…

1994/1…

1996/1…

1998/1…

2000/2…

2002/2…

2004/2…

2006/2…

2008/2…

2010/2…

2012/2…

2014/2…

2016/2…

Ukraine

Russia

Australia

Wheatyields(t/ha)

Russia, Ukraine and AustraliaUkraine,RussiaandAustralia

Wheat yield trends

y=0.0855x+2.2273R²=0.37944

y=0.019x+1.542R²=0.04933

0

0.5

1

1.5

2

2.5

3

3.5

4

t/ha

Ukraine Australia

Russia, Ukraine and AustraliaUkraine,RussiaandAustralia

0

5,000

10,000

15,000

20,000

25,000

30,000

1990/1991

1992/1993

1994/1995

1996/1997

1998/1999

2000/2001

2002/2003

2004/2005

2006/2007

2008/2009

2010/2011

2012/2013

2014/2015

2016/2017

Russia

Australia

Ukraine

Wheatarea(‘000ha)

Russia, Ukraine and AustraliaUkraine,RussiaandAustralia

0

5,000

10,000

15,000

20,000

25,000

30,000

1990/1991

1992/1993

1994/1995

1996/1997

1998/1999

2000/2001

2002/2003

2004/2005

2006/2007

2008/2009

2010/2011

2012/2013

2014/2015

2016/2017

Russia

Australia

Ukraine

Wheatarea(‘000ha)

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0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Russia

Australia

Ukraine

WheatProduction(kt)

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0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Russia

Australia

Ukraine

WheatProduction(kt)

Russia, Ukraine and AustraliaUkraine,RussiaandAustralia

Areas sown to various crops

Wheat,13.3

Barley,3.7

Canola,2.4

Oats,0.8 Other,3.1

Australia

Wheat,23.0

Barley,7.5

Sunflower,6.4

Oats,2.8

Other,10.2

Russia

Areasowninmillionsofhectares

Russia, Ukraine and AustraliaUkraine,RussiaandAustralia

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Corn

Wheat

Sunflower

Barley

Soybean

Canola

Ukrainegrainproduction(kt)

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RussianRoubledepreciation

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UkrainianHryvniadepreciation

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20

40

60

80

100

120

140

160

180

200

Australia USA Germany Canada Poland Russia Ukraine

EUR/t

Cashcosts Depreciation Opportunitycosts GrossRevenue

Attractive profit margins for wheat production in Ukraine and Russia

Source:Möllman (2015)

Russia, Ukraine and Australia

Supplychain cost:farmtoloadedatport

(AUD$/t)Australia 85Ukraine 57Russia 70Canada 113

Less costly supply chains

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5

10

15

20

25

30

35

2013

/14

2014

/15

2016

/17

2021

/22

2026

/27

2031

/32

2033

/34

Wheat Barley Corn

Russia’sprojectedmajorgrainexports(mmt)

Source:UkrAgroConsult

Russia, Ukraine and Australia

Russia, Ukraine and Australia

Russia, Ukraine and Australia

Russia, Ukraine and Australia

Top15DestinationsforUkrainianGrainFiveyearaverage2010-2014

Russia, Ukraine and Australia

Top15DestinationsforUkrainianGrainTwoyearaverage2013-2014

The cost of Australia’s bulk grain export supply chainsSub heading/////

Implications of these trends for Australia’s wheat export industry

Russia, Ukraine and Australia

2. Theirgrainlogisticsnetworksaremodernising.

Understandthethreat

1. RussianandUkrainianwheatexportsareincreasing.

4. BlackSeawheatisdisplacingAustralianwheatinprice-sensitivemarkets(e.g.MENAregion).

3. BlackSeawheatisincreasinglygainingacceptancebyflourmillsinAustralia’skeyAsianmarkets.

5. RapidlygrowingAsianmarketscancontinuetoacceptAustralianand BlackSeawheat,eventhoughAustralia’smarketshareinsomeofthoseAsianmarketsislikelytodecline.

Russia, Ukraine and Australia

1. AustralianwheatgrowerscanbenefitfromgrowthinAsianconsumptionofwheat,AND we’llbenefitmoreifweknowwhyAustralianwheatisvaluedindifferentAsianmarketsegments;andifwecommunicateandactonthatintelligence.

Understandtheopportunity

3.Matchinstitutioncompetition,whereworthwhile.AustralianwheatfacesnotonlypricecompetitionfromBlackSeawheatbutalsoinstitutionalcompetitionfromCanadaandtheUSA.

2.EnsurewemonitortheBlackSearegion.It’sbecomingtheworld’smostimportantwheat-exportregion,It’sresponsibleforabout30percentofglobalwheatexports.Itschangesinwheatproduction(duetoclimate,technology,politicsorpolicy)

willinfluence theinternationalwheattradeandtherebydirectlyorindirectlyaffectAustralianwheatexports.

The cost of Australia’s bulk grain export supply chainsSub heading/////

Thank You