New path to market

There’s an interesting project underway in the Wimmera this season.

Eleven farmers are growing a new high-fibre wheat for a flour mill in Japan.

This wheat was developed by the CSIRO. Their research indicates improved digestive health, protection against genetic damage that precedes bowel cancer and help in combating type two diabetes as benefits of consuming products made from this wheat.

The flour can be used in all the normal foods – pastas, pizza bases, muffins and chocolate brownies.

It’s likely consumer demand will be strong.

The project stimulates some thoughts around our approach to getting this product to customers.

Wheat exports from Australia are pretty much dominated by the large traders.

They have the capital, multi origin capability and logistics clout to control a large share of commodity exports.

Increasingly, though, it seems their profits are driven by volume of trade, not by maximising the value of the wheat crop – thus the ‘cheapest grain in the world’ tag we’ve been ‘enjoying’ for the last year or so.

The exciting thing about the new wheat type is we can build a new path to market.

We can move our thinking from trading to marketing.

We can look to the extra ‘value’ in this product at consumer level and ensure a share of that flows back to growers.

With this project, it’s the growers working directly with the researchers and the flour mill.

We don’t need an extended supply chain that dilutes both information flow and margins.

It’s a collaborative production model where we work together to increase the size of the pie, instead of a more combative trading model where we fight for the biggest slice.

Under the production agreements this season, growers have been able to lock in a base price of $670 per tonne delivered to port for new crop.

The agreements allow for quality issues or tonnage shortfall due to the seasonal factors beyond the control of the grower.

So we’re able to capture the current high prices without having the worry of production risks – something that’s almost impossible to do in a normal trading transaction.

Current varieties of the high-fibre wheat do suffer a yield penalty when compared with the best mainstream varieties.

A portion of the price premium compensates for this.

But with better varieties available in the next one to two years, that yield gap will be quickly closed.

Consumers in developed countries are increasingly choosing foods that offer either perceived or real health benefits. These consumers are prepared to pay for what they want. It’s a different mindset to commodity consumption, where price is the most important factor.

Demand for the high-fibre wheat will take it well beyond being a niche product.

The Japanese mill expects its consumption to grow from 4000mt this year to 40,000mt in five years’ time – and that’s just one mill.

As new grain technologies are released, more opportunities will emerge for grower groups to have a direct role in the commercialisation process.

The benefits to individual farm businesses, and to the rural economy, can be significant.

PHOTO: Tristan Coram with some high-fibre wheat in AGT's glasshouse at Roseworthy, SA.