Opportunities for grains industry in African population growth

An investment in research needs to be undertaken to better understand and capture, at least a slice of, the potential future grain markets in Africa and Asia, according to Grains Australia chief executive Richard Simonaitis.

Mr Simonaitis spoke last week at the WAFarmers annual conference “Plan, Prepare, Perform” in Perth, and said Africa was expected to double in population by 2050 — with a new market of 1.3 billion people across the continent needing to be fed.

The research needed to assess what the impact was potentially going to be on Australian markets and whether t it would “suck all of the (produce from the) Black Sea down into Africa” or if there was just going to be “a lot more hungry, poor people in Africa.”

Grains Australia has begun work on obtaining foundation market intelligence in Africa, which Mr Simonaitis imagined would lead to further analysis and country reports in the near future.

He said Nigeria was a good example of the possibilities in Africa.

Ten years ago Nigeria was importing about 400,000 tonnes of wheat but “they are now importing four million tonnes of wheat,” he said.

“It’s just about all going into instant noodles.”

He said when other countries in Africa followed Nigeria with urbanisation, convenience, a Westernising diet, “it will shape the global demands for grains”.

He also highlighted the potential of other markets such as the Middle East and Asia.

“If we ever get peace and stability in the Middle East there’s big, big markets there that we could switch back on fairly readily, such as Iraq, Iran and Syria, which would take in three or four million tonnes each historically, so there’s opportunities there assuming the world can get its act together at some point,” Mr Simonaitis said.

“In Asia, as those populations continue to increase their wealth, their demand for safe and healthy food and understanding where it was produced, will only ever continue.”

He said from research already undertaken, anything to do with health had a strong place in Australia’s export markets.

He said Australian producers could feed about 50-60 million people in the international community and with 650 million in the ASEAN countries and another 2.5 billion in India and China, Australia had to work out which 50-60 million it wanted to target.

“Most of our customers are quite poor people, and price is important, but also some of the richest people in the world live in our markets, and there’s opportunities to access them around their consumption of health-based products,” he said.

Work had been done into assessing claims manufacturers have been making on their labels, which in the richer Asian countries was about sustainability in health factors.

He said, when taking into account the rate of heart disease and diabetes in Asia and the Middle East, which was about 25-30 per cent, “getting healthy grain-based diets back into these societies, whether it’s oats, whole-grain breads and noodles, and those sorts of products, is an important thing for us to focus on long term”.

“We are trying to service a lot of poor people but it’s also important to understand that we have got very rich, very discerning consumers in our market, and these are the people going to the gym, taking supplements and doing those sorts of things.

“It’s really important that we have a service offering that is aimed at that segment of the market because they are the ones who will drive innovation going forward and who will set the aspiration for the rest of the population, to drag themselves up and try to achieve, and they are the people that are able to influence the regulators that we have to deal with in those markets.”

Mr Simonaitis said Australian grain producers had a great story to tell the world but that message needed to adapt to the future needs of the consumer-driven market.

He said the younger generation was making decisions based on evidence, and good marketing of the Australian produce targeting them was important for growers to realise greater profitability.

“They can pick up their phone and can provide themselves with evidence to inform a decision (around purchasing),” he said.

Understanding these factors was important for the future of the grains industry, as regulatory creep, mainly from the European Union, and dozens of market interventions by multiple governments due to a combination of nationalistic politics around food security, or as COVID-19 responses, were impacting trade.

Mr Simonaitis said CBH had undertaken “a high level look” at sustainability and “the messages they are getting is zero-tolerance for chemical residues, to full traceability (in grain exports) as the gold standard, and everything in between was fairly uncertain”.

“The one thing I know to be absolutely true,” he said.

“If there’s a gap between what the customers expect and what we can do now, we need to understand how we are going to invest into that.”