Wheat farmers in Australia, the world’s fourth-biggest shipper, will face an increasing challenge keeping up with their neighbors’ appetite for bread and noodles.
Demand from Indonesia, the Philippines and three other Southeast Asian nations is set to jump 40 percent to 13.2 million metric tons by 2020, said Greg Harvey, chief executive officer of Interflour Group Pte.
That may outpace the ability of Australia to supply the variety used in soft bread and noodles, he said in an interview in Singapore.
Faster growth and an expanding population are boosting consumption of everything from wheat and sugar to cooking oils in the region, which has more people than the European Union. Indonesia will become the world’s second-largest wheat importer this year and has overtaken India as the top user of palm oil, the U.S. government estimates. The U.S., Canada and Russia could fill any shortages in Australian supply, he said.
“It’s a bullish story for Australian wheat,” said Harvey, whose company is a venture between Salim Group in Indonesia and CBH Group, Australia’s biggest grains shipper. “There will be more demand in 2020 than the ability to supply, at least on paper. That’s a good problem to have.”
While wheat imports by Southeast Asian countries from all origins will reach 17.75 million tons in 2014-2015, or 8.6 percent more than the average in the past five years, exports from Australia are estimated to be 8.2 percent below the five- year average, U.S. Department of Agriculture data show.
“We have a productivity growth rate at about 1 percent a year and I hope this will continue,” said Simon McNair, chief executive officer at Australian Grain Growers Co-Operative. “There’s a finite amount of farmlands. There’s competition from other agricultural products like cattle, and other crops,” he said by phone from Adelaide.
Bloomberg News, edited by ESM
