Opportunities exist to segment Australian wheat into differentiated products and attract premiums from key world markets, mirroring the success of Western Australia's udon noodle wheat story.
Grains Industry Association of Western Australia (GIWA) Wheat Council deputy chair and InterGrain chief executive, Tress Walmsley, told the 2020 GRDC Grains Research Update, Perth that - following the success of Australia's exclusive marketing arrangement for noodle wheat - potential exists to differentiate Australian wheat into other target markets, such as soft, wholegrain and even feed or lower-quality segments.
Ms Walmsley said there would be large growth over the next decade in the worldwide consumption of cakes, biscuits and confectionary which would open the door for Australian growers to focus on lower-protein, soft wheat varieties.
She said there would also be a greater focus from affluent consumers on wholegrain products, which would present an opportunity for Australia's wheat industry.
Soft wheat opportunities
WA, in particular, has the capacity to produce soft white wheat to compete with production from the Pacific Northwest, presenting a major marketing opportunity if customer requirements are clearly understood and all parties in the supply chain participate in market development and protection, Ms Walmsley said.
"In the 1990s, WA growers used to grow large tonnages of Tincurrin, a soft wheat variety, which, at the time, was the highest-yielding variety in WA," she said.
"This is evidence that many areas throughout the state would suit these lower-protein varieties at these types of production levels if we could secure an export market."
The US currently has a worldwide exclusive on the soft white wheat market, with two to four million tonnes sold every year into multiple international markets.
"The US is going to fight very hard to protect a market that is incredibly valuable to them," Ms Walmsley said.
"But we have the breeding capacity to take them on and we have a freight advantage over the US to some of our key markets.
"If we are going to get into this market space, breeders will have to initially focus on high-yielding varieties and less on quality."
Ms Walmsley said the success of the udon noodle market was proof this market differentiation was achievable.
"Over the past 30 years, we developed a unique product and we now have an international reputation of delivering quality udon noodle soft wheat to Japan," she said.
"As an industry, we have mastered an amazing feat in terms of differentiation that no one else in the world has been able to do - so how do we do it for other Australian grain products?"
We need to make sure that our classification system is nimble and responsive to allow the industry to capture both differentiated and volume-based markets.
Australia's udon customers are the same people who are buying soft wheat from the Pacific Northwest, she said. "So we already have the relationship there."
Targeting this market would involve industry-wide discussions, particularly in regard to storage segregations and market development.
Wholegrain markets
Another differentiated marketing opportunity was in the wholegrain market, with affluent buyers having the capacity to be "fussy consumers".
"The wholegrain industry is a pretty exciting space and has the potential, in my mind, to be the next udon noodle market for WA," Ms Walmsley said.
"Provenance becomes a key factor when people become more affluent, so focusing on supply chain traceability is of key importance if we are to chase this market.
"Australia has an advantage over most other grain producing nations because we produce white wheat - which presents an opportunity in health food products."
Ms Walmsley identified India and the US as the only competitors who currently produce white wheat and could target this growing health food market.
"India is an irregular exporter so we do not consider it to be major player in this market, and the white wheat from the US is soft wheat, which is not suitable for bread, so Australia already has this great opportunity where we have this foundation set of genetics and a system to allow us to capture this market," she said.
Lower-protein wheat
While feed wheat may not be a segregation that traditionally demands a premium, Ms Walmsley believed there were opportunities in focusing breeding efforts on high-yielding feed and lower-quality varieties.
"Here in WA, we supply a lot of Australian Standard White (ASW), which is white, clean and basic milling quality - but we are not breeding for this product - and there is not a breeding company in Australia I know of that is targeting this grade of wheat; we are all focused on breeding for Australian Prime Hard (APH) and Australian Hard (AH)," she said.
"Breeding companies are unlikely to get involved with feed wheat at the moment simply because we do not have a reward mechanism that encourages this type of breeding effort, so if we want to go down this path, we have to work out as an industry how we are going to change that."
But she said breeding for true feed wheats could present a potential challenge in maintaining Australia's clean, white wheat reputation.
"If we are going to breed for true feed wheat varieties then we are going to need to bring red wheats into the system. This could be an issue for us in in our supply chain because we do not want any segregation mixing," she said.
"As an industry, we have spent years establishing Australia as the white wheat capital of the world, so we have to protect this value before we allow red wheats into our supply chain."
Whole-of-industry review
Wheat Quality Australia is currently undertaking a review of the wheat classification system to ensure that Australia can capture the market value of these growing market opportunities, and a range of options are being considered.
One suggestion put forward by the wheat breeding companies is to reduce the number of wheat classes.
"We need to make sure that our classification system is nimble and responsive to allow the industry to capture both differentiated and volume-based markets," Ms Walmsley said.
She said, again, the example of WA's udon noodle market demonstrates this can be done.
"We already take Australian Premium White Noodle (APWN) quality value out of the large hard stacks and we blend it with our udon wheat to make our final product," she said.
Translating this to other soft wheats, there are opportunities to blend udon and biscuit varieties if the markets are only chasing a lower-quality product.
"An exciting opportunity being explored is the creation of a new class which would have basic milling characteristics; white hard wheat, a minimum late-maturity alpha-amylase (LMA) , is dry and clean," Ms Walmsley said.
If this class of wheat was created, she said, the shackles would then come off the breeding companies to allow a much larger focus on yield with just basic milling quality.
"While it is expected breeding companies will continue to focus their strategies on the higher-quality markets (APH and AH), this lower quality allows the industry to also develop a wheat product that has slightly better quality than other origins like the Black Sea but with an improved yield potential."
More information: Tress Walmsley, 08 9419 8000, twalmsley@intergrain.com