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.


0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

Ukraine

Russia

Australia

Wheatyields(t/ha)


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)


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


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)


0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Russia

Australia

Ukraine

WheatProduction(kt)


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


0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Corn

Wheat

Sunflower

Barley

Soybean

Canola

Ukrainegrainproduction(kt)


RussianRoubledepreciation


UkrainianHryvniadepreciation


0

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)


Supplychain cost:farmtoloadedatport

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

Less costly supply chains


0

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


Top15DestinationsforUkrainianGrainFiveyearaverage2010-2014


Top15DestinationsforUkrainianGrainTwoyearaverage2013-2014


Implications of these trends for Australia’s wheat export industry


2. Theirgrainlogisticsnetworksaremodernising.

Understandthethreat

1. RussianandUkrainianwheatexportsareincreasing.

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

3. BlackSeawheatisincreasinglygainingacceptancebyflourmillsinAustralia’skeyAsianmarkets.

5. RapidlygrowingAsianmarketscancontinuetoacceptAustralianand BlackSeawheat,eventhoughAustralia’smarketshareinsomeofthoseAsianmarketsislikelytodecline.


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.


Thank You

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

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