Global demand for oats is on a roll but the boom bust prices paid to farmers are stifling industry’s growth

WA grain farmers are in the box seat to capitalise on booming international demand for oats but the boom-bust nature of prices and the flow on effect on plantings are stifling the industry’s growth. Oatinformation president Randy Strychar, one of more than a dozen headline speakers at the world’s biggest oat conference being held in Perth this week, said the global oat industry was booming at a level he had not seen in his more than 40 years working in the specialised field. He said the world would need an additional 1 million tonnes of additional oat milling capacity by 2027 to keep up with booming global demand for the product widely regarded as a superfood. Mr Strychar said there was no sign the surging demand for oats would wane, with Australia in the box seat as the world’s second-biggest oat exporter, representing 10-15 per cent of the trade behind the behemoth oat exporter Canada at 75 per cent. About 300,000 tonnes of oats are milled in Australia each year. Leading the charge was booming global demand for oat milk, with the industry expected to grow from $2.51 billion last year to $2.74 billion this year at a compound annual growth rate of 9.4 per cent — before rising a further 7.8 per cent to $3.70b in 2026. The lower price of oats — in comparison to WA’s major crops wheat, barley and canola — was labelled the number one obstacle for growing the industry by Mr Strychar, followed by research funding limitations and trade barriers. Oat prices paid to WA farmers average about $300 per tonne but can fluctuate wildly year-on-year, based on global and domestic plantings, with the grain once used primarily for stockfeed somewhat regarded a boom-bust industry. Prices paid to WA grain growers have ranged from $200 and $450 per tonne during the past five years. Increasingly-recognised human health benefits and attempts by domestic and international suppliers to capture this trend have meant growing milling oats have become a more attractive option for WA farmers. But amongst a backdrop of rising input prices, the price being paid for oats is still regarded as too low. Mr Strychar said the global pricing model for oats was outdated, adding that farmers needed to be paid more and the world’s wildly fluctuating oat plantings needed to stabilise. “Yes we still feed oats to livestock… but the pricing model is outdated… most food and milling companies would agree but getting that to change will be difficult,” he said. “Year-on-year oat area changes are too large for the oat industry. “Oat is no longer a feed commodity… it is a boutique commodity. “Unless we fix that, we are going to have a big problem with supply.” WA farmers are expected to harvest 500,000 to 600,000 tonnes of oats this year, with headers starting to roll through paddocks and a total harvest bigger than 20 million tonnes expected. CBH chief marketing and trading officer Jason Craig said about 25 per cent of the nation’s oat milling capacity was for the domestic market, with key export markets showing year-on-year growth. He hailed China and Japan as major growth markets. CBH threw open the doors of its Blue Lake Milling oat milling facility in 2018, with the Forrestfield-based business able to process 60,000 tonnes of oats for international markets per year. Mr Craig said crop competition and dwindling oat production were the biggest “Achilles heel” for the oat industry’s growth, saying difficulty sourcing and the expense of container freight was also a major challenge. “Many of our customers are disappointed prices are going up, but they aren’t going up as rapidly as other commodities and gross margins on oats remains relatively small compared to either crops,” he said. “We need to make sure there is an improvement (in price and yield) to make sure oat hectares do not continue to decline.” Mr Strychar said there was no evidence global demand for oats would fall, as interest in breakfast cereal and snack bar sales, oat milk, and other oat products continued to surge. But he said the price of oats was unlikely to increase until millers started having difficulty sourcing the oats they needed. “If these growth numbers continue, this will be a problem moving forward,” he said. Mr Strychar said the impact of the Ukraine and Russia conflict had created major uncertainty for all grains markets, including oats, with Ukraine one of the top 15 global oat product exporters last year. “The most concerning numbers is that some of the (world’s) biggest oat growing regions have either one per cent or negative oat production growth…. And in the US it is irreversible because their soils are not suited to putting oats in the ground,” he said. “Farmers will grow whatever they are being paid the best for.”