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Monday, 16 June 2008
Page: 2135

Senator ADAMS (8:45 PM) —This evening I would like to take the opportunity to speak about the future of wheat marketing in Australia. I support the Wheat Export Marketing Bill 2008 and the Wheat Export Marketing (Repeal and Consequential Amendments) Bill 2008 with some amendments, which were flagged by the Leader of the Opposition, Dr Nelson, in the House.

The Wheat Export Marketing Bill 2008 was introduced with the Wheat Export Marketing (Repeal and Consequential Amendments) Bill 2008. This legislation establishes a system for regulating the export of bulk wheat. It establishes a new industry regulator, Wheat Exports Australia, known as WEA—which will control bulk wheat exports by managing an export accreditation scheme—and sets out the functions, powers and membership of Wheat Exports Australia. It authorises Wheat Exports Australia to formulate a wheat export accreditation scheme by legislative instrument, which provides for the accreditation of companies as wheat exporters. It also establishes criteria for the accreditation of companies under the scheme, conditions of accreditation, cancellation and surrender of accreditation and reporting requirements. It provides for an internal review of decisions made by Wheat Exports Australia in respect of the accreditation scheme and for review by the Administrative Appeals Tribunal. It also provides for Wheat Exports Australia to maintain a register of accredited wheat exporters which is available for inspection on the internet. It provides Wheat Exports Australia with information-gathering powers and the power to order an external audit of an accredited wheat exporter. It establishes a Wheat Exports Australia special account for the purposes of the Financial Management and Accountability Act 1997. It also establishes a civil penalty regime for breaches of the act and provides for the Productivity Commission to begin to conduct a review of the act and the accreditation scheme before 1 January 2011.

The Wheat Export Marketing Bill 2008 is the result of longstanding and long-lasting effort. It manifests the end of monopoly policies in Australia and marks the start of a free market for wheat. Now, with the introduction of the Wheat Export Marketing Bill 2008, wheat growers, for the first time since 1939, have the right to decide to whom they will sell their grain and at what price. This is a major step for farmers in Western Australia and South Australia, who export some 95 per cent of their grain, due to the lack of a domestic market. As a wheat grower from Western Australia, this has been a great frustration for my family and I and for many of our colleagues. The deregulation of the domestic market in the eastern states has given them the choice as to whether they sell on a deregulated domestic market or pool their grain, as they did with the AWB. That was also the idea of the national pool, with what was really the receiver of last resorts. So, they did have choices, whereas we have not had those choices. Currently, wheat growers in WA and South Australia are almost totally dependent upon the export market for their annual income.

The new legislation is a great opportunity for wheat growers to meet the requirement of a fast-moving international market, especially in times of increasing demands and rising global food prices. Many growers are ready for change, and I have noticed a considerable shift in the views of Western Australian growers over the last two years. They have come to terms with the possibility of a deregulated market and the advantages that this can bring. I believe that the former coalition government’s appointment of the Wheat Export Marketing Consultative Committee, chaired by John Ralph, has been largely responsible for this change. The committee undertook extensive consultation with the Australian wheat industry, particularly growers, about their wheat export marketing needs. The consultation process included 26 public meetings in major wheat-growing regions of Queensland, Victoria, New South Wales, South Australia and Western Australia.

I attended five out of the eight meetings held in Western Australia and was amazed at how the growers’ views changed after hearing the evidence at these meetings. I would like to read some quotes from growers who did attend these meetings. At a meeting in Perth, a Badgingarra farmer said that it was a basic denial of his rights to force him to sell his wheat to AWB. A farmer from Cranbrook, which is in the south of the state, agreed, saying that as an individual grower he wanted the ability to choose where he sold. A Katanning farmer from the Great Southern region said that, in the interests of the industry, it was time to move on; deregulation was inevitable but not necessarily immediate. Interestingly, a farmer from the Merredin meeting said that growers who supported deregulation were selfish. An argument came against this statement, which was heard at the Perth meeting, when a farmer from the Midlands area, supporting deregulation and speaking on behalf of 34 other like-minded farmers, said that it was not his responsibility if another farmer made a bad business decision. A Calingiri farmer said that he was insulted by the insinuation that growers could not be marketers. He wanted choice. A farmer from Eneabba was bewildered as to how, in this country, the outdated system of the single desk was still in place.

The point I am making is that, all of a sudden, with information, growers have really started to think about their options and whether this legislation is going to help them. I think the main thing is the bottom line. As has been shown with the deregulation of bags and containers, farmers—especially in South Australia and Western Australia—have had a choice and have been able to make more dollars for their grain. Unsurprisingly, and as we have heard tonight from my colleagues, there are still farmers who have some reservations about whether they have the skills to market their own wheat. In my opinion, it is crucial that the grain groups and farmers continue their dialogue, sharing their ideas and concepts so that they can get the best possible deal.

I will just pause here to quote from the Countryman and the Farm Weekly, which are our two major country weekly newspapers in Western Australia. In the Countryman of Thursday, 12 June there was an article headed ‘Wheat’s new dawn: Emerald a new marketing gem’ which said:

The independent specialist grain pool manager and marketing group, Emerald, says the new wheat marketing environment will see widespread changes in the way Australian wheat is marketed and the options available to growers, although aspects of the market such as pools will remain an integral part of the new marketing landscape.

Emerald deputy chairman Mike Chaseling said while growers would have more choice and flexibility than ever before, they should not expect wholesale differences in the product on offer.

He said Emerald was ready for the new era, having already pioneered major innovations in the way pools are offered and managed.

The Western Australian Farmers Federation have gone into partnership with this company and will be providing a pool for their members. Then we have an article entitled ‘A local team you can trust’, which said:

With a strong track record of performance, Plum Grove has established itself as a pool manager that WA growers can rely on.

And we have ‘Using a pool you can trust’, which said:

When choosing your pool make sure it has

1. Clear objectives

2. A solid track record of performance

3. Strong financial backing

4. Experienced pricing managers

5. Access to premium markets

Another article is headed ‘No need to be confused’ and reads:

Growers will be faced with unprecedented levels of choice this season.

With the rapidly changing landscape of grain marketing, there are opportunities to profit from smart decisions when selling their crop.

Exciting? Yes, but with this comes the responsibility of ensuring you are in a position to handle the huge increase in information and required decision-making.

It was on this premise that DailyGrain was founded last year.

These organisations, plus a number of others, are starting to move forward and offer a service to our farmers so that they can really make an informed decision about what they are going to do when we have a deregulated market.

I believe that, by keeping the dialogue in a steady flow, a deregulated market is the best way to ensure that the wheat industry continues to prosper. An example of this was when the former coalition government deregulated bags and containers, on 27 August 2007. Since then, Australia has broken shipping records for wheat exported to overseas grain markets in containers. Figures released by the Export Wheat Commission in mid-May highlight this boom. The figures clearly show that non-bulk wheat exports continue to increase, with approximately 1.5 million tonnes exported in the eight months since non-bulk wheat deregulation to 30 April 2008, compared with 550,000 tonnes exported during the same period in 2006-07. Since last August, wheat exporters have managed to explore new marketplaces, now selling to a number of countries they could not get permits for in the past—for example, Malaysia and Indonesia, two of the largest destinations.

That is just one example of the positive benefits a deregulated market can give to individual growers—and the majority of growers are aware of these benefits. One such grower is Kim Halbert, a wheat farmer from Three Springs in WA’s midwest. He gave evidence to the Senate Standing Committee on Rural and Regional Affairs and Transport inquiry in Perth. This inquiry undertook extensive consultation with the Australian wheat industry, and particularly growers, talking about their wheat export marketing needs. When we first set the agenda for the committee inquiry, we were to hold one hearing in Canberra, one in Sydney, one in Melbourne, one in Brisbane, one in Adelaide and one in Perth. With the submissions that came forward, we ended up doing two hearings in Canberra and one in Perth. As a member of that committee, I was quite amazed that growers, especially those very concerned growers in the eastern states, did not take the opportunity to gather their colleagues and have enough submissions in Brisbane, Sydney, Melbourne and Adelaide. I was very surprised by that. Some of them did come to Canberra to give evidence, but we certainly did not have the number that we expected when we first set the agenda for the committee.

Mr Halbert said in evidence in Perth that Western Australia had a very small domestic market and, as a result, Western Australian farmers rely on the wheat export trade and have not had access to a competitive system in the past. As I said, in stark contrast to the situation in Western Australia, eastern state growers have had this choice and tend to use the single desk as a backup whenever they cannot sell their grain into the domestic market. Mr Halbert stated that deregulation is the best prospect for Western Australian growers to have a choice about how they sell their wheat and to whom they sell it. It is the best opportunity for them to maximise profits for various wheat varieties, offering the chance not to be restricted to dealing with only one company.

With the new legislation, growers will have more choice and flexibility than ever before. However, they must not expect wholesale differences in the products on offer. Many grain pool managers, as I have outlined, have already prepared for the change and have readjusted their programs to be tailored to suit the needs of growers. The benefit of deregulation will be that growers can now select products and payment options that best suit their business.

The single-desk marketing system has failed Australian wheat growers for many years. To me, there has always been an inherent conflict of interest for AWB between satisfying its shareholders and maximising grower returns. The lack of competition has led to inefficiency, high costs and substandard management, creating a situation where wheat growers are at the bottom of the food chain in terms of receiving the true market value for their grain. Single-desk marketing has failed to maximise grower returns. Many independent studies demonstrated that the costs of the system were too high, exceeding the illusionary benefits by far. As a monopoly, the AWB(I) obtained total power in controlling what deals wheat growers received if they sold their grain overseas. There is clear evidence that AWB(I) offered discounts to sell into certain markets. As a result, they accepted less than the world price and counteracted the growers’ interests, which is to achieve the best price possible.

The report released today by the Export Wheat Commission has found high-risk hedging strategies by AWB cost farmers $260 million in one year. The monopoly bulk grain exported did not maximise returns to growers from its 2005-06 national pool. Despite this, some growers still support the system which gives them the illusion of safety, offering a buyer of last resort. But, unfortunately, this is only an illusion. There is no buyer of last resort and there never has been. Under the present export marketing rules there is only a receiver of last resort, namely AWB(I), who has no obligation to pay a single cent to growers. They offer just a pool where the grain goes—nothing more. Yet the buyer of last resort is the most quoted argument to maintain the single desk. It is an argument which cannot convince me.

Senator Chris Evans —You missed some farmer in Western Australia, Judy.

Senator ADAMS —I probably have! I now want to speak briefly about these regulations in the bill which I cannot support and I call on the government to amend. The most important change must deal with the access to the export accreditation scheme. The new marketing act will only allow companies and cooperatives to export wheat; individuals are still restricted from exporting their own wheat. It must be done through a company or cooperative. The Liberal Party wants this restriction to be lifted. The new bill must allow individuals to be exempt from accreditation if they wish to directly bulk export their wheat to an international purchaser. Such growers do not require a middleman to sell their crop. Nor should they have to resort to the use of bags and containers if they prefer to bulk export. It is crucial that individuals be exempt from accreditation costs. The bill requires grain traders to pay $12,100 to be accredited to export wheat under the deregulated market. Exporters who are accredited are then free to export any tonnage of wheat to any country in the world during the next three years for that fee. This fee must be lifted from individuals who wish to export their own grain. They need an incentive to pursue their chances in the deregulated market and should not be punished.

I also call on the government to amend the provisions that relate to bulk-handling companies. As outlined by the Leader of the Opposition, Dr Brendan Nelson, these companies face a dramatic change of regulation after October 2009. Prior to this date, accredited exporters who are also providing port terminals only have to publish a statement on their website explaining the terms and conditions under which they will allow other exporters access to their facilities. The government has failed to specify the type of information that must be contained in this statement. For example, access to the whole up-country infrastructure, such as grain receival and accumulation services, is currently left undefined. This has to change.

Bulk-handling companies who own the up-country infrastructure must state that they are willing to provide access to their up-country infrastructure, as well as to ports and the shipping stem. If this is done, the Liberal Party does not understand why the regulations have to change from October 2009. Bulk-handling companies are allowed to operate entirely under their own terms for more than a year—to be precise, for 16 months. If there are no problems reported either on the access to the up-country infrastructure or on the access to ports or shipping stems, why should they have heavy-handed and costly regulation imposed upon them? Let me highlight this point to you further. From October 2009, the current bill requires accredited exporters to have a formal access undertaking accepted by the ACCC, making it a very costly— (Time expired)