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Wheat Output in Western Australia May Grow 29%, Premier Says

Wheat output in Western Australia, the nation’s biggest exporting state for the grain, may increase 29 percent by 2016 as producers respond to expanding global demand, Premier Colin Barnett said.

“We could increase wheat production on average from around 7 million tons to around 9 million tons by further improvements in farm technology,” Barnett said in an interview in Tokyo. The target could be achieved in five to six years, he said.

Food output will have to climb by 70 percent by 2050 as the population swells to 9 billion and rising wealth boosts meat and dairy consumption, according to the United Nations Food & Agriculture Organization. The world food price index compiled by the body rose to a record in February, while food inflation fueled unrest across North Africa and the Middle East that toppled leaders in Tunisia and Egypt, the largest wheat importer.

“High prices will encourage wheat growers to increase planting this year globally. If weather conditions aren’t as bad as last year, the harvest this year will grow, leading to a drop in Chicago futures to as low as $5 a bushel,” said Takaki Shigemoto, an analyst at research firm JSC Corp. in Tokyo.

Japan, Asia’s largest wheat importer after Indonesia, is the biggest export market for Western Australian wheat. The state normally supplies about 850,000 metric tons a year to Japan mainly for noodle production, Barnett said.

Photographer: Kimimasa Mayama/Bloomberg

Colin Barnett, premier of Western Australia. Close

Colin Barnett, premier of Western Australia.

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Photographer: Kimimasa Mayama/Bloomberg

Colin Barnett, premier of Western Australia.

Wheat for May delivery was little changed at $7.585 a bushel on the Chicago Board of Trade at 5:06 p.m. Tokyo time. The price climbed 58 percent in the past year as drought in Russia and flood in Canada reduced supplies. Australia is the world’s fourth-largest shipper after the U.S., European Union and Canada, according to the U.S. Department of Agriculture.

‘Drought-Tolerant’

“An increase in production will come from improving the whole farming process, but also the development of more drought- tolerant varieties that can survive in low-rainfall areas,” Barnett said yesterday. He was in Japan to meet customers for mineral and agricultural products from the state.

Wheat production in Western Australia slumped to 4.58 million tons in 2010-2011 because of dry weather, according to the state’s Grain Industry Association. Drought-tolerant wheat varieties under development in the state use conventional plant- breeding technology, not genetic modification, Barnett said.

Maharashtra Hybrid Seeds Co., an Indian seed breeder partly owned by Monsanto Co. (MON), plans to develop the country’s first genetically modified wheat and rice that can withstand drought and salinity. In the U.S., the largest wheat shipper, the National Association of Wheat Growers and U.S. Wheat Associates adopted principles in 2008 for the eventual commercialization of biotech wheat.

Japanese Consumers

“Japanese consumers are very conscious about that,” Barnett said, explaining the reason for the state not to adopt gene-modification technology for food crops. Western Australia has allowed farmers to grow modified canola and cotton.

The Flour Millers Association in Japan has said it won’t buy modified wheat because of consumer resistance. GMO crops contain a gene from another organism, giving the plants a resistance to herbicides and the ability to produce their own toxins to kill pests. Critics say there may be health and environmental consequences over time.

Western Australia usually supplies China, the world’s largest wheat grower, between 200,000 and 400,000 tons. As China continues to urbanize, limiting domestic grain production, wheat demand from the country is expected to increase, Barnett said.

“I don’t see a sudden jump” in Chinese wheat imports, he said. “The biggest growth will come from the Gulf region.”

Middle Eastern countries such as Saudi Arabia may overtake Japan as the largest destination of Western Australian wheat, as demand in the region is growing at a faster pace because of rising population, urbanization and changing diets, Barnett said.

To contact the reporters on this story: Aya Takada in Tokyo atakada2@bloomberg.net; Ichiro Suzuki in Tokyo isuzuki@bloomberg.net

To contact the editor responsible for this story: James Poole jpoole4@bloomberg.net

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