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 Senate inquiry backs competition for wheat 

Senate inquiry backs competition for wheat

02 May, 2008 04:14 PM
The Senate Rural and Regional Affairs Committee has thrown its backing behind legislation to increase the amount of competition in the export wheat market.

The finding has been immediately welcomed by the Australian Grain Exporters Association, which says the majority support for the legislation being passed as soon as possible should give wheat farmers certainty ahead of this year's harvest.

"The changes proposed under the Federal Government's draft legislation will help Australian farmers and exporters to work together to build a strong, accountable, competitive, transparent and open wheat export marketing system," AGEA president Robert Green said.

Mr Green said the Committee's recommendations demonstrated it had listened to the issues raised by the industry during the consultation and hearings.

"We welcome the Committee's recommendation to clarify a number of issues, including the objectives of the legislation, the powers and discretions of the Wheat Export Authority, and the process of accreditation itself," Mr Green said.

"The Committee's recommendation to provide for legislative review of the Act was also raised by the AGEA in our submission, which proposed a review in 2011, and then every five years after that."

Mr Green said the Committee's recommendation to provide certainty of equitable access to bulk storage and handling was welcome, and that the issue needed the independent scrutiny of the Australian Competition and Consumer Commission or an equivalent organisation.

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Of course the Grain Exporters Association would welcome deregulation of Australia's wheat marketing system.

They want to be free to divide up growers and buy from the weakest seller.

With over 20,000 growers and a handful of genuine buyers, they will get all the competition they want amongst the growers.

And if traders still cannot get low enough prices from Australian growers then they will forsake us and buy from growers in USA and EC.

After all USA and EC growers can always afford to undercut Australian growers because they receive "free subsidy money" from their Governments to make up the shortfall!

That is why Australian growers continue to show strong support for the Single Desk.

But the Australian Government seems to care little about the growers' feelings.

Maybe when our once mighty wheat industry is destroyed and Australia has to import wheat every year they will see the light.

Posted by NSW farmer, 5/05/2008 8:02:28 AM
growers will benefit from the presence of multiple buyers in a contestable market that offers choice/competition and security through an accreditation system - this system will ensure that growers get all the competition they want amongst buyers for their wheat.
Posted by john Begg, 5/05/2008 11:13:50 AM
Spoken like a true grain trader John Begg.

However, let us not overlook the facts.

In most years world wheat production well and truly exceeds consumption.

In that picture Australian production exceeds domestic usage by up to 20 million tonnes.

It then goes onto a world market with up to 125 million tonnes available for export.

Of that quantity USA and EC exports combined are often about 50- 60 million tonnes.

Growers in USA & EC are paid assistance money by their Governments which enables them sell their wheat below the cost of production and still make a profit.

Therefore the buying competition John Begg speaks of is also able to choose the cheaper USA & EC wheat ahead of Australian wheat.

So even with extra buyers within Australia I do not believe for one minute that traders would want to pay a higher price for our wheat than for USA & EC wheat.

Posted by NSW farmer, 5/05/2008 2:37:09 PM
If single desk has the support that NSW farmer claims, then deregulation will not have any affect on him because farmers will continue to market with AWB and cross-subsidise the pools.

I for one will take an option to avoid AWB.

Their aim was to get a good return for shareholders and to sell the wheat to happy customers being offered undercut prices in a way that allowed them to still retain bonus incentives.

We put over 5,000 tonnes in the 2005 AWB pools and only got paid around $2/tonne more than our 80% advance and loan.

The 80% was on an estimated pool return that the WEA conservatively estimated that was around $30-$40/tonne less than it should have been to start with.

Farmers want standard business protection that will remove the exemption from ACCC/Trade Practises Act and the financial services act which will reduce the harvest of farmers in the future.

Posted by Julie Newman, 5/05/2008 3:00:30 PM
Why throw the baby out with the bath water Julie?

Just make sure the National Pools are totally separated from any cash grain trading activities.

Unfortunately that was not the case in 2005.

It is also worth drawing attention to the fact that under Single Desk arrangements, growers are just as free to access futures/derivatives markets as under deregulation.

They also have access to containerised exports and the growing domestic market.

Finally, at the risk of repeating my point and being irritating, there is still no factual evidence of how deregulation is going to make your wheat returns better Julie.

Simply maintaining the rage with AWB is hardly a rational economic path towards higher wheat income?

Posted by NSW farmer, 5/05/2008 9:23:29 PM
"Together we stand, divided we fall" a famous quote by someone...but how true it is.

Look at the ten pins fall when the US bowl us over one pin at a time.

We as growers are pretty naive to believe that the system will protect us.

We have as growers a product that they need to service their customers.

How much of a slice of the grain industry pie we get in our pocket diminishes every time we give over power to the merchants, storage and handlers, and the keepers of the keys to the shipping of grain.

Posted by stoolly, 5/05/2008 11:54:25 PM

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Q: What do you think is the key driver of the current global food shortage?

Seasonal conditions affecting yields
(9.3%)

Ethanol diverting food to fuel production
(8.8%)

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(6.4%)

A combination of all of the above
(68.1%)

Total Votes: 408
Poll Date: 02 May, 2008

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