High demand boosts oat market

UniGrain expects to purchase and process more than 120,000 tonnes of milling grade oats from WA farmers this year, as demand from Asian markets continues to surge.

According to UniGrain oat accumulation manager Jason Reed, the new WA market entrant expects it will continue to buy an increased volume of oats in coming years.

In October 2014, Eastern States-based UniGrain acquired the oat milling and oat trading business of Morton Seed and Grain, including the processing mills at Wagin and Bibra Lake.

The Wagin plant will continue to receive oats from growers, then clean, dehull, steam and dry them before being sent to the Bibra Lake facility to be processed into breakfast cereal

Mr Reed said UniGrain was committed to growing and investing further in oat milling in WA, and there was every reason for Australian famers to grow oats with confidence that a strong and stable end market existed for their product.

Until recent years, farmers had considered oats as sheep feed but in recent years the demand for milling oats, particularly from China and India, had driven up prices.

UniGrain is now offering forward contracts of up to $303 tonne for Oat 1 grade oats delivered to its Wagin plant in June and July 2016 (subject to crop outturn).

"Consumer awareness of the health benefits of oats, along with a growing appetite for breakfast cereal products in Asian markets, is continuing to drive demand for high-quality, Australian-grown and milled oats," Mr Reed said.

Combined with the release of new varieties such as Williams and Bannister, farmers were starting to embrace milling-grade oats as a viable cropping alternative.

Mr Reed said farmers were attracted by the versatility of such variety oats, which could be grown for milling or for hay and feed.

In addition, oats were less susceptible to frost than wheat, so played an important role in helping farmers to reduce their vulnerability to this weather event.

He expected the new breeds to be very popular during the 2015 season.

In terms of investment, UniGrain is continuing with plans by Morton Seeds to install a steam-operated boiler at Wagin, which will generate around 90 per cent of the plant's energy needs.

Oat husks can also help power the boiler.

Meanwhile, a desalination plant is due to be installed at Wagin the next six months to convert bore-pumped water into fresh water for powering the boiler, while supplying excess fresh water back to the Shire of Wagin.

Mr Reed said the two bores and desalinater could pump and treat up to 40 million litres a year.

"In addition to the environmental benefits from using the steam, and desalinating our own water, it means our costs will be lower, which enables us to be more competitive in international markets," he said.

Mr Reed said UniGrain also made stock-feed pellets, using the byproduct of oat husks as a base.

An option offered to farmers is to exchange oats for pellets over coming months.

UniGrain will next week host a series of grower information days between February 23 and 26 at Lake Grace, Wagin, Pingelly and Tenterden.