Horizons #78: Who says there’s no such thing as a free lunch!

07 October, 2022

by Professor Ross Kingwell, AEGIC Chief Economist

Australia’s natural environment provides some key trade advantages.

Australia, the ‘Great Southern Land’, is one of the few southern hemisphere sources of large exportable surpluses of grain. Most exportable grain surpluses are in the northern hemisphere (chart 1). Hence, whenever North America, Europe or the Black Sea region experience drought or disruption to their grain supplies, buyers then look further afield, including southern hemisphere sources like Australia, to secure their supplies. For countries in East Asia and South East Asia Australia is a southern hemisphere source that is geographically close, offering sea freight advantages. Australia’s geographical proximity to sources of growing demand for traded grains is part of Australian grain farmers’ ‘free lunch’.

Chart 1: Sources of global wheat exports in 2022/23. Source: USDA (2022)


The geographical location of Australia also bestows on it other natural advantages. Australian grain farmers harvest their grain into a warming, often dry environment. This means that in most parts of Australia, grain is harvested without the need to apply desiccants like glyphosate. It also means little need for grain drying (Photo 1). These environmental advantages mean that Australia can sell sun-ripened grain, free of desiccants, at attractive moisture levels that prolong product shelf life and mean more grain (or less water) is purchased by customers. The avoidance of grain drying also reduces the emissions footprint of Australian grain, adding to the environmental credentials of Australian grain.

Photo 1: Dry drying equipment (source: GraindryerGrain dryer & grain silos & grain handling 06CC BY-SA 4.0)

The sun, its warmth and the dryness of Australian summers, and Australia’s proximity to its customers offer Australian farmers a natural trade advantage. In short, the Australian environment and geographical position provide to farmers ‘a free lunch’; allowing the production of naturally dried grain, free of harvest desiccant chemicals and not too costly to ship.

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Horizons: the AEGIC Economics and Market Insights blog

Expert grains industry analysis and commentary from AEGIC’s Economics and Market Insight Team on a range of big-picture topics that affect Australia’s export grains sector.

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