Australia: ABB Grain Ltd as a major player in Australian barley market

Regarding barley production, the 2003/04 season was not an average year; it was unusual in that it was a high production year but with a much lower malting barley percentage, ABB Grain Ltd commented on May 26.

Production in South Australia (SA) for 2003/04 was 2.55 million tonnes (Mt), according to ABARE production figures, of which ABB received 2.38 Mt and has exported 1.9 Mt (72% feed, 28% malt).

Victoria’s total barley production was 1.75 Mt, of which ABB received 1.47 Mt. Victoria particularly felt the effects of the unusual nature of the season with only 39% (700,000 tonnes) of production making malting quality, compared to the average of almost 70%. This left over 1Mt of the total Victorian crop as feed barley – double the average amount, and above what is required by the local feed market.

Rather than the usual net deficit of supply against local feed barley demand, Victoria actually had a large net surplus in this unusual year. Reflecting this is the greatly increased number of export shipments made by ABB during that year – in excess of 800,000 tonnes.

ABB’s records indicate that the total barley exported from Victorian ports in bulk during the same period is approximately 1.3 Mt. Given that ABB acquired all but 300,000 tonnes of the Victorian origin crop, and that no account has been made for retained grain for seed and on-farm feed, it is clear that significant tonnage, some 500,000 tonnes or more flowed from NSW through Victorian ports.

Two main contributing factors to this were the large size of the NSW crop and the significant amount of grain exported by Graincorp through its single desk control of both the export and domestic market in NSW.

It is the freight advantage to Victorian ports for southern NSW origin grain that causes the grain to be moved across the border, not the higher prices in Victoria that occur for domestic reasons. This causes a false perception of inflated export volumes of Victorian grain.