AEGIC News and Stories

Seeing it’s the AFL 2022 finals, I’d like to start with a quote from former Footscray, West Coast and Collingwood coach, Mick Malthouse. He famously quoted a Confucian saying, “The ox is slow but the earth is patient.” The key meaning was that for a football team, change does happen, it just takes time, so you need some patience. How does this relate to grain prices?

The AFL 2022 finals are underway and morning coffees are likely to be full of dissection of the weekend triumphs or woes. Amid the conversations, you may very occasionally hear the word “gut-running”, referring to the players with remarkable athletic endurance.

Much media attention focuses on political and economic tensions between China and many other regional and western nations. In the case of Australian agriculture, attention is often focused on the trade restrictions imposed by China on a range of Australian export goods like wine, barley and lobsters. Yet China remains an important provider of many manufactured goods used in Australia, including Australian agriculture. As Figure 1 shows, there are many goods imported by Australia for which China is either the main supplier, or one of the main suppliers. In brackets after the description of each import item is the share of imports of that item that come from China.

Farmers with long memories tell their grandchildren that there was a time in Australia when wheat prices were so low that Australian wheat production had to be restricted to help drive up prices. At the instigation of the Australian wheat industry, in 1969 restrictions were placed on the quantities of wheat that could be delivered to the Australian Wheat Board. Each wheat grower was given a quota to reduce the build-up of excessive carryover stocks after the record 1968–69 Australian wheat harvest that coincided with increased world wheat stocks that suppressed global wheat prices.

Opportunities for Aussie grains are on the rise in South East and North Asia as consumers increasingly look at not just price, but sustainability and health benefits, when choosing grain-based foods.
Labelling on products can provide a consumer with information that helps the consumer to buy the product, or not. Recent research by AEGIC scrutinised the labelling claims on grain products in South East and northern Asian markets. We investigated the type of claims made on these products, the food sectors they are used in, and the prevalence of claims on new food products. And, we looked ahead at leading markets to get an indicator on the direction in which labelling could go.

Since the mid-2000s the bulk freight capacity of international shipping has grown strongly (Figure 1), on the back of a huge ship-building program in the period 2006 to 2012 (Figure 2).  However, in very recent years new construction of bulk ships as a proportion of the trading fleet has been very low (Figure 2), despite the volume of grain traded globally continuing to grow as has demand for other main bulk commodities (iron ore and coal).