Wheat Quality Officer, Australian Wheat Board. Melbourne
The aim of any seller of a commodity must be to achieve the complete satisfaction of buyers. While various forces interact, at times, to make “buyers’ markets” and “sellers’ markets”, in the longer term marketing advantages will be governed by the seller recognising the needs of the buyer.
Currently, the Australian wheat industry is operating in a buyers’ market place and is facing strong competitive pressures. These pressures are not only due to an oversupply wheat situation and changes in political marketing strategies in some of the major wheat exporting countries, but also because of changes in the economic and agricultural policies of many former large wheat importing countries. For example, there is increased domestic wheat production in India, Saudi Arabia and China, and a move towards the greater utilisation of indigenous food crops in many undeveloped and developing countries.
Coupled with these changes there have been significant technological developments throughout the world in the flour milling and flour processing industries which are aimed to producing a better quality product more economically. These advances have exerted additional pressure on the seller, not only in terms of having to supply a more uniform product but also in being required to provide more precise specifications in contracts.
This technological advance may create a demand for high or low protein content wheats, higher or lower quality wheats, or may lead to greater utilisation of indigenous food crops.
In any event, the buyer will always be looking for both cost and quality advantages.
A favoured term which is used by importers of wheat is low cost gristing. This describes the purchase and blending of various wheats to give the desired flour quality at the lowest cost. It is an advantage for the wheat buyer to be able to select from a range of wheat types of varying qualities and costs, to produce flours to suit the needs of his particular market.
Classification Of Australian Wheat
A classification and grading system for wheat must readily indicate to buyers a price/quality relationship, i.e. the price for a particular class of wheat should in the long term approximate the quality of that wheat compared to other classes of wheat.
In the short term, supply and demand factors can override this price/quality relationship.
The international wheat market is becoming increasingly more demanding in terms of quality, and it is taking a keener interest in specifications being guaranteed for wheat purchases.
The market areas which are showing the greatest potential for increased flour consumption are South East Asia and the Middle East. These markets purchase different wheat qualities to suit their particular end-use requirements. However there is no attempt in the Australian wheat industry to “tailor-make” wheats to suit these markets or other markets in particular.
In fact, instead of “tailor-made” wheats, the marketing requirement is for a range of wheat “quality types” for the different end-uses: bread, noodles, arabic bread, chapatis and biscuits, etc.
The classification system, which is based on wheat variety, protein content and physical standards, ensures that the grades which are segregated have qualities which make them suitable for a range of end uses, and are in broad quality groupings to compete with other wheat exporter grades.
Wheat quality is a complex subject but basically it comes down to four separate factors: protein content, grain hardness, flour dough strength and milling quality (flour yield and flour colour).
Grain hardness and milling quality are varietal characteristics and are not influenced greatly by the environment.
Protein content has a greater influence on overall processing quality than any other single factor. While the environment is the major determinant of the actual protein level achieved, the variability between wheat varieties in their capacity to accumulate protein is also important.
Flour dough strength is related to a combination of total protein content and also protein quality. It is therefore influenced by the environment but also has a major genetic component.
A wheat which has a weak dough strength will always behave as a weak wheat relative to other varieties, although its dough properties will alter depending on the total protein content of the qrain.
What Are The Effects On Wheat Marketing?
The major long term marketing problems confronting the wheat industry are, firstly, the reduction of protein levels (Figure 1) in the ASW wheat grades. There is also increasing evidence that due to the higher yield of newly released wheat varieties and declining soil fertility, there is the potential that lower tonnages of the Prime Hard and Australian Hard wheat grades will be segregated in the future. The second problem is the reduction in dough strength in some of the premium wheat grades (Figure 2).
Figure_1. Average protein content of ASW wheat for 1967-87 (national weighted average)
Figure 2. The reduction in dough strength of premium wheat grades, 1967-87.
For both the ASW and premium wheat grades it is difficult to quantify the environmental effect on protein content and dough strength compared to the varietal effect. However, it is a fact that the majority of recent varietal releases have exhibited inherent protein levels of 0.1 to 1% below the protein content of the wheat variety to be replaced, and many of the varieties released for the premium grades have dough strengths below the required minimum (below Control Variety).
The basic aim of wheat breeding programmes is the improvement of yield and the incorporation of disease resistance. This has led to a philosophy in the release of wheats that it is sufficient to maintain “quality” and that small decreases in “quality” (for one or more parameters) are acceptable. This philosophy from the marketing viewpoint is not acceptable as most wheat flour products have a minimum protein level in the flour below which it is impossible to guarantee the production of a satisfactory product. Assuming a satisfactory balance of dough properties, this minimum figure for flour protein (except for biscuit flour) is approximately 9.0 - 9.5% (14% moist). At normal flour extraction rates this equates to a wheat protein in the range of 10.0 to 11.0% (11% moist).
This protein level is at the very upper limit of the protein levels currently being achieved in the ASW grades in Australia. Therefore, the release of new wheat varieties which substantially lower the protein level of the ASW grade cannot be countenanced. In the future, it should not be assumed that wheatgrowers delivering low protein ASW wheats will receive the same returns as those for higher protein ASW wheats.
Anyone who has been associated with the detailed quality evaluation programmes which precede the release of a new variety will be aware that any substantial increase in yield is generally associated with a decrease in protein content. The decrease in the ASW protein content has been stalled, to some extent, in States such as Victoria and Western Australia. This has occurred because the new hard grained varieties which have been released have tended to replace softer grained wheats, and genetically the harder grained wheats have up to a 1% protein content advantage. However, recent new wheat varieties have eroded this initial position, as hard grained higher yielding varieties have been released in these States.
Decreasing Protein Content - Implications
Wheatgrowers who produce wheats in areas where premium wheats (Prime Hard, Australian Hard) are segregated, are currently sowing high yielding varieties which have an inherently lower protein content than previous varieties.
In this situation, if the protein test on a grower’s delivery fails to reach the receival standard minimum protein level for the Prime Hard grade (12.8% NSW, 13% Qld), under the current GMP pricing arrangements the grower foregoes $9.93 per tonne. Therefore, to maintain the same returns per hectare the wheatgrower requires around a 10% yield increase.
Similarly, for the Australian Hard grade, if the protein minimum is not achieved the grower foregoes $7.86 per tonne, which equates to around an 8.5% yield increase to maintain returns. Therefore, growers should carefully evaluate the economics of producing premium wheats if they sow varieties which are inherently low protein “accumulators
The situation for the ASW wheat grades is totally different. Currently, there is no financial penalty associated with the production and delivery of low protein ASW wheat varieties. Therefore, the wheatgrower is encouraged to produce high yielding varieties which increase his returns per hectare. As previously mentioned, protein levels in the ASW grade have progressively declined. The capacity to meet customer expectations in relation to protein content has accordingly declined.
The AWB is continuing to evaluate the feasibility of paying growers for the protein content of ASW deliveries. Payment based on protein levels would provide an incentive to aim for higher protein and would improve the equity position between growers. A trial programme on protein assessment in the ASW grade was conducted during the 1987/88 season in all States and a report and recommendation has been presented to the AWB’s Board. Brief aims of the programme are:
(i) to evaluate feasibility of load by load testing for protein;
(ii) to evaluate feasibility of paying growers based on the protein content of their ASW deliveries;
(iii) to evaluate the accuracy and reliability of whole grain protein testers for protein and moisture readings. Other equipment was also included in the evaluation process;
(iv) to investigate the possibility of incorporating other parameters into the ASW payment for quality scheme, e.g. screenings level and moisture content;
(v) to examine the protein ranges of deliveries within a site. This information may be useful to agronomists in an examination of the variability of the protein level in relation to both variety and agronomy, and may assist growers to increase protein level s.
(b) Marketer (AWB)
A decrease in protein content leads to reduced tonnages of premium wheats being segregated. This can cause problems in guaranteeing continuity of supply to long term customers. It can also affect the Board’s ability to penetrate new market areas.
Decreased tonnages of premium wheats may also affect sales of other wheat grades, as many Australian wheat customers purchase and ship a combination of wheat types.
The major exporters of wheat all market a base grade wheat which is sold without protein guarantee. In the case of the USA this grade is Hard Red Winter Ordinary, which generally has a protein level in the range of 10.5 to 12% (11% moisture).
The Australian base grade is ASW (around 70% of total receivals), which in recent years has a protein content of between 9.5 and 10.5% (11% moisture).
ASW wheat is competitively priced against US Hard Red Winter Ordinary. Therefore, in effect, customers purchasing ASW wheats are receiving a lower protein content.
This may not be a problem in those markets which purchase ASW wheats for other quality characteristics (starch quality, cleanliness, low moisture, etc) in addition to protein content. However, if the guarantee of protein content becomes an integral part of the marketing of Hard Red Winter Ordinary and ASW wheats, it is unlikely that customers would agree to pay the same price for both the lower protein ASW wheat and the higher protein Hard Red Winter Ordinary wheat.
Variations in grain protein content do have an effect on marketing. However, other quality characteristics such as flour dough quality also play a significant role in the marketing of wheat.
In general, high yielding hard grained premium wheat varieties would be sown in areas which will ensure that they are received into the Prime Hard or Australian Hard grades. The payment to growers for protein content in the ASW grades is currently under evaluation.