In 2019, Australia lost its main malting barley export market. Suddenly, Australian growers were not able to access a market that had been buying the majority of Australia’s malting barley exports. The change had an immediate effect on Australia’s trade, which had left itself open to concentration risk.
In recent years, the Australian Export Grains Innovation Centre (AEGIC) has actively communicated the benefits of Australian malting barley to a wide range of current and potential overseas markets in Asia and beyond, including Brazil, Ecuador, Peru, Mexico, Colombia, South Africa, Ethiopia, India and Vietnam. The program aims to lessen the concentration risk for Australian barley by stimulating demand in new markets.
Collaborating with industry, AEGIC’s barley markets manager Mary Raynes has delivered 26 pre and post-harvest malting barley webinars across these markets since 2020.
Australia has a great story to tell about the quality of Australian malting barley and the world-leading supply chain that underpins it. Australian barley has an excellent reputation globally thanks to a very strong breeding program and the rigorous variety accreditation program.
Malting barley quality
Customers in these markets are particularly interested in learning about the quality of Australian malting barley, as well as practical, technical advice on how to optimise its value. After participating in these webinars, customers realised how easy and reliable it is to trade with the Australian barley and the broader grains industry.
Since a peak in 2018, the market concentration risk for Australian barley has reduced. One way of measuring export market concentration risk is via the Herfindahl index. In this index, a score of 100 means that one market purchases all of the product, while a score near zero means the product is evenly distributed among many markets.
The average score for Australian malting barley between 2014 and 2022 was 60.2. The 2022 figure is 14.1 – a massive reduction in concentration risk. However, it is important to point out that the total volume in 2022 was 34 per cent of that in 2017 because of the lack of access to Australia’s previous major malting barley market.
Each export grain industry needs to reduce, where possible, its concentration risk wherever and whenever that is judged necessary.
In general, the adage of ‘not having all your eggs in one basket’ is sound advice. Reducing market concentration risk by diversifying markets helps underpin the resilience of the industry.
That said, some key grain export markets can be reliable, premium markets, so sending a large proportion of export volumes to those markets can be attractive, even though additional market concentration occurs. Hence, in practice, plotting a course for each export grain requires being aware of the trading reliability of each trading partner.
The key takeaway is that, in general, each export grain industry needs to reduce, where possible, its concentration risk wherever and whenever that is judged necessary.
AEGIC’s malting barley webinars are supported by the Agricultural Trade and Market Access Cooperation (ATMAC) program.
This webinar program is led by AEGIC in collaboration with industry, including Grains Australia, Grain Trade Australia, the federal Department of Agriculture, Fisheries and Forestry, the Department of Foreign Affairs and Trade, Austrade, Ag Scientia, Adelaide University, Grains Industry of Western Australia, CSIRO, Pilot Malting Australia and Rabobank.
AEGIC is an initiative of the Western Australian State Government and Australian growers through GRDC.
More information: Mary Raynes, Mary.Raynes@aegic.org.au; Chris Carter,Chris.Carter@aegic.org.au