Disaster unlikely to hit exports
As the tragedy of Japan’s earthquake and tsunami disaster unfolds, reverberations through to WA’s agricultural sector are likely to be muted.
A major importer of Australia’s meat, grain, fodder and diary, Japan’s enormous earthquake last week has left the country — Asia’s richest — reeling in the wake of an impending humanitarian and economic crisis.
But even as the death toll and number of homeless rises, demand for Australia’s agricultural commodities could remain relatively unchanged. Nevertheless, with 16 of Japan’s major ports closed, delays are expected.
CBH Grain head of marketing Tom Puddy said five of the company’s cargoes had been affected.
“Some are sitting off the coast, others are en route and some are being loaded this week, ” he said.
“We’re still assessing the situation and waiting on advice from ship owners and authorities.”
Mr Puddy said he doubted that orders would be cancelled, and it was far more likely that Japanese authorities would simply re-route food cargoes to unaffected ports and then distribute bulk commodities via the road network.
“We’ve had no requests for delayed shipments at this stage, but those ports damaged may be out of operation maybe for months, ” he said.
“We may be asked to delay cargo in the future. If that happens, CBH will do everything it can to help out.”
Japan buys around three million tonnes of grain annually from Australia, of which two million tonnes comes from WA.
Emerald WA general manager Rob Proud said the grain market had not reacted strongly to the tragedy in Japan, primarily because there had not been a shift in demand.
“The economic fallout of this will be a different story to grain prices, ” he said.
“We have no idea how the economic impact might affect grain prices but the reaction will be measured, because they still need to import grain.”
It was a sentiment shared by Mr Puddy, who said if there was to be any impact on grain prices, it would most likely affect base items for luxury goods, such as malting and shochu barley.
“The Japanese can’t stop taking food products, because they don’t have huge storage, ” he said.
“Normally, they only hold stock for two to three months. If anything, in the longer term, it could prompt government to buy reserve stocks and push the market higher, but I’m not anticipating that.”
For many Australian agricultural companies, the biggest concern has been the wellbeing of employees based in Japan.
Mr Puddy said CBH’s representative in its Tokyo office were safe, but unable to travel to work due to radiation leakages from nuclear plants.
Even without the radiation risk, huge power shortages have crippled public transport, leaving workers stranded at home.
Hay Australia exports hay to the hard-hit Sendai area, and managing director Andrew Bolt said to his knowledge, workers who the company dealt with in Japan were safe.
Mr Bolt said the impact on Hay Australia’s operation would be minimal due to WA’s limited hay supply.
“Logistically, there will be some obstacles because our product went through the Port of Sendai, ” he said.
While the dairy export market to Japan was worth $500 million, milk processors said earlier this week it was too early to tell if the quake would have an impact on trade.
However, National Farmers’ Federation president Jock Laurie said the Asian nation could look to Australia to fill immediate needs for fresh food and water.
“They have to supply fresh food and water to their people fast, and exports of Australian produce will help Japan do that, ” he said.
While some quarters were indicating the Japanese disaster had added to an existing bearish mood for agricultural commodities, Mr Proud said price impacts were likely to be muted.
Instead, the ongoing conflict in North Africa and uncertainty in the Middle East were having a more dramatic and instantaneous impact.
“We’re seeing less demand initially because of that, ” Mr Proud said.
“When there is political unrest, buyers of grain always slow down.”
We’ve had no requests for delayed shipments at this stage, but those ports damaged may be out of operation maybe for months.Tom Puddy, CBH Grain
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