New golden age for oats

CBH’s plans to build a new oat processing mill at Forrestfield has marked another step in the coming of age for WA’s milling oat industry.

Grains Industry Association of WA Oats Council chair Will Carrington-Jones said oats, previously used primarily for stockfeed, had traditionally been a boom-bust industry.

But increasingly recognised human health benefits and attempts by domestic and international suppliers to capture this trend meant growing milling oats had beocme a more attractive option for WA farmers.

CBH announced last week it would build a modern oat processing facility at the Metro Grain Centre in Forrestfield. The project builds on CBH’s acquisition last year of Blue Lake Milling, one of Australia’s largest suppliers of processed oats. CBH’s new WA plant will enable the BLM business to increase its ability to service the growing Asian demand for oat products, using locally grown oats.

The CBH facility will process up to 60,000 tonnes a year and compete for supply with UniGrain mills in WA, a new processing mill being built by Quaker Oats in Forrestfield, and various other smaller producers and exporters.

Last year UniGrain said it could purchase and process around 120,000 tonnes of milling grade oats annually. Quaker Oats meanwhile expects to have its new $20 million Forrestfield plant up and running for this harvest, but remains tight lipped about the volume of oats to be purchased and processed each year. Other domestic suppliers are also looking to purchase increased volumes of oats.

Quaker Oats supply chain manager Chris Maughan said additional local milling capacity was welcomed as domestic buyers provided a stable market for WA growers.

He did not expect there to be a shortage of oats supply as a result of the increased processing capabilities.

“This year plantings and growing conditions are looking good as a result of the favourable prices, which should provide good supply. Longer term we also expect there will be ample supply as planting this type of crop becomes increasingly popular,” he said.

Mr Maughan said having a substantial local processing capability provided a stable market base, which would act as a bench for setting prices for the export market.

Premium Grain Handlers, which exports oats to China, India, United Arab Emirates, Malaysia, South Africa and Japan, reiterated the view that increased local demand would help WA growers plant oats with confidence.

PGH managing director John Orr said whether processing mills were established offshore or in WA, these had the positive impact of increasing demand for oats.

“The production of oats will continue to expand on the strength of those new mills both onshore and offshore. We have always been competing with CBH, so that side of it does not change but it is further demonstration to growers that growth in demand is real and they should feel confident about growing bigger tonnages in the future.”

Earlier this year PGH was offering growers forward contracts for oats1 of $300 tonne.

“We had good take up and growers who did take advantage of that are are pleased because the price now is around $260 tonne (still well above the long term average of $180 tonne),” Mr Orr said.

GIWA estimated in its June crop update that around 260,000ha of oats had been planted in WA this season.

Mr Carrington-Jones said there was easily demand for around 500,000 tonnes of WA oats per annum between domestic mills and exporters. He estimated this could rise to one million tonnes within five years.

He said the advent of new varieties such as Mitika, Bannister and Williams enabled yields to pushed through the 4t/ha mark, meaning gross margins stacked up well against other coarse grains.

Meanwhile, CBH has sold its Lupin Foods Australia business assets to Agricultural Opportunities Australasia.

The sale of LFA’s assets to AOA will ensure the work conducted by LFA in the development of the lupin flake product will be continued. AOA will re-establish lupin processing operations at a new location which will ensure existing lupin flake customers can continue to source the product at selected retail outlets.

In a statement AOA said it was looking forward to working with the WA lupin industry, through the development of strategic relationships and products to supply the growing export demand for lupin products.