Drought Shrinks Australian Wheat Exports

Article excerpt

FOR more than 40 years, Australia has been a great wheat grower, exporting its high-quality grain around the world.

Now faced with its worst harvest in 20 years, Australia will be buying wheat from other countries to supply its own bakeries.

"It is questionable whether Australia will be self-sufficient in all grades of milling wheat," says John Lawrenson, managing director of the Australian Wheat Board, which markets the grain.

It is also likely Australia will now have to buy wheat from foreign sources to satisfy its export contracts.

The Wheat Board said yesterday it would use all wheat produced in New South Wales this year for the domestic market. Wheat from NSW and Queensland usually goes to Japan and other markets that require high-quality hard wheat.

A drought and lower plantings are expected to reduce the harvest by more than 30 percent. As a result, officials at the Wheat Board are now deciding which customers won't get grain and which will get a reduced amount.

The poor harvest takes some of the sting out of the most contentious issue between the United States and Australia. In past years Australia has complained about US and European wheat subsidies. This year the Australians will be less significant competitors in the export market.

The harvest is officially estimated at 10.6 million tons compared to a normal 15 million tons. But even Wheat Board officials expect the crop to be lower after a revision in two weeks. Exports will be at least 4 million tons less than last year's 11 million tons.

With the lower production, the Wheat Board is now trying to figure out how to supply grain to traditional long-term customers while not alienating new customers, such as South Korea, which trebled its purchase of Australian wheat last year.

The Wheat Board, says Mr. Lawrenson, will cut off customers who "buy from us when it suits them.... Those markets, without exception, we won't be selling to."

Regular customers will also get reduced deliveries.

Australia's top customers last year were Iran, Egypt, China, Japan, South Korea, and Indonesia. Normally Australia also supplies Iraq with 1.25 million tons of wheat, but since last year's United Nations embargo, shipments have been curtailed.

US officials are trying to convince Australia to buy US wheat. …