Bakery, Noodles & Co-products

Demand Varies with Market for Bakery, Noodles.

  • Consumption of wheat has been generally declining, but some Asian countries, consumption is increasing as markets become more sophisticated and westernised.
  • The new demand created by biofuels, largely driven by government policy (US) is anticipated to increase consumption over the medium term.
  • Increasing affluence in India and China are resulting in shift in diets to more meat and dairy, but reports on wheat consumption indicate growth in line with population growth, but declining per capita consumption.
  • Health and well-being are significant points of difference that are being exploited to increase market share in more mature declining western markets.

Supply of Wheat and Ingredients

  • Australia's wheat crops of the last 5 years has been impacted by drought in 2002 and 2006, resulting in decline in 5 year average production.
  • South Australia on average sows close to 1.9 million ha of wheat (excluding durum) producing 3.2 million tonnes (5 Year average for period 2001-2006 is 2.8 million tonnes).
  • Global supplies and trade has been volatile in recent years, driven by poor 2006 season in the major exporters, declining end-stocks, uncertainty in both the production capacity in the Ukraine and import demand for China and India.
  • Price forecast for wheat for 2006 and 2007 is bullish. ABARE is forecasting 3%growth in wheat price to 2011. Farmers globally will respond to the higher prices by increasing production.
  • Flour production in SA is dominated by several locally owned small to medium size enterprises (SME) with some capacity to produce organic certified lines and national milling companies, managed from the eastern States.
  • Bakery and noodles (fresh) are largely geared to supply of the domestic market, while biscuit manufacture and frozen bakery has recently added export markets.

Challenges and Opportunities

  • Innovation is a key to growth of the sector with potential opportunities in product, branding and packaging particularly aiming to capitalise on comparative advantage with a differentiated product based on health and well-being.
  • GM plant breeding technology provides opportunity to accelerate gains in plant breeding for production efficiency or capacity or e.g. adding or enhancing special dietary health benefit features to the grain.
  • Research and development response through e.g. new varieties with special attributes suited to new or novel end use applications e.g. frozen dough, sponge and dough bread (opens new commodity markets in Asia).
  • Improve supply chain cost efficiencies.
  • Bulk commodity focus with monopoly export marketer restricts ability to differentiate product and capitalise on high value small scale niche opportunities.
  • Market intelligence not reflected particularly well (other than price and segregation standards) back to the grain grower.