As regular readers of The Compass know, global grain Supply and Demand is forever being dissected as the key driver of prices. At a macrolevel, both Supply and Demand are steadily increasing, along with human population, but Supply is more seasonally variable, to make things exciting. However, one thing that isn’t often discussed is the Demand usage of grain. What surprises the regular Joe is that animals consume a LOT of grain. Really, a LOT!
If we step up on to the starting block and dive into WA’s biggest commodities, we will find the following:
Wheat
High protein milling grades of wheat, by and large, go into a flour mill’s grist for human food, whereas the lower grades go into feed mills or feedlots. In the middle, the millions of tonnes of WA’s ASW farewelled at port could just as easily end up making two minute noodles or duck feed. Seasonal factors play a big part, with lower protein outputs more likely to end up in feed, rather than flour. No matter what, mill mix (the stuff not good enough to make its way into flour), screenings and other milling waste, are sold to feed animals. Generally speaking, 25% of milled wheat, by weight, ends up heading out the mill’s by-product backdoor. As an average, let’s assume 60/40 flour to feed use, and 25% of flour use ending up as feed. This assumption will see 55% of WA’s wheat being used to feed beasts.
Barley
If high value malting barley is destined to go toward the production of amber filled glasses of beery goodness, then the BFED1stack at Corrigin is obviously destined for feed, isn’t it? Not necessarily. Now that Chinese borders are open again, a good deal of feed barley will be used to make a local alcoholic water (some may call it beer, some may not). Nonetheless, even malted barley has waste, in screenings and culmings, and what is used in the wort ends up as spent grain, all of which is sold for feed. So, like wheat, let’s assume the split is 50/50 feed to malt (though it’s hard to gauge how thirsty the Chinese are – the Sino curtain is opaque) with 40% of malting barley, by weight, ending up as feed once it is cleaned, malted and brewed i.e., 70% of the crop passes through an animal’s gullet.
Canola
The obvious factor with canola is that the valuable component, the oil, is packaged in a seed outer that is obviously not oil (as that would be really tough to harvest and handle) and, like all packaging, it has to be disposed of thoughtfully. Fortunately, the outer seed is high in protein, meaning it has value to feed mills. Canola is roughly 45% oil which deductively infers 55% of all canola, by weight, is sold as animal feed in the form of canola meal.
Lupin
Despite the best efforts to promote the lupin food industry, it’s safe to say the vast majority of lupin is still used for animal feed, whether consumed locally, in Europe, Vietnam or South Korea. Let’s go with 95% as animal feed use.
Taking the above rules of thumb, the table below shows the average WA production over the last five years and how much ended up in the gut of an animal. As telegraphed - it’s a LOT.
It’s also worth noting that WA does not produce the big global animal feed crops of corn and soy. An amazing 1.2 billion tonnes is destined for animal feed annually from those two commodities alone and, accordingly, heavily drive grain pricing, due to the general substitutability across commodities. Animals are the kings of world demand.
So, if you hear someone waxing lyrical about the social benefits that come from diminishing the role of animals in the food supply chain, perhaps remind them that, without animals munching through the components of the crop that humans haven’t desired for millennia, there will be no market to subsidise the quality flours, pulses and oils that make up the bulk of our calorific intake. What will that do to social impact?
