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Rural and Regional Affairs and Transport References Committee
16/07/2013
Ownership arrangements of grain handling

MUNRO, Mr Jock, Grain Grower, Southern New South Wales

[15:52]

CHAIR: Thank you, Mr Munro, for finding your way from Rankins Springs or wherever. The season is all right out there, you tell me?

Mr Munro : Yes, pretty good.

CHAIR: The price of lambs is pretty good?

Mr Munro : Never good enough, Senator Heffernan!

CHAIR: If you could kindly give your name, rank and serial number and let us know if you have ever been to the Junee Correctional Centre, I would be grateful!

Mr Munro : I am a wheat grower from Rankins Springs in south-western New South Wales.

CHAIR: Mr Munro, would you care to make an opening statement?

Mr Munro : Have the senators read my submission?

CHAIR: Some will have. Is that your submission?

Mr Munro : Yes.

CHAIR: If you would like to, just, in five minutes, summarise your thoughts that are in the submission.

Mr Munro : Okay.

CHAIR: We have got your submission, and you can retable that if that is your submission, but I think it is fair that you make some sort of an opening statement.

Mr Munro : Okay. I am coming at this from a position of why we find ourselves where we find ourselves, if you know what I am saying. It comes as no surprise to people like me that we are in a situation where our industry is being taken over by foreign companies. I will read my first paragraph here. It says, 'Thank you for allowing me to present a submission and to appear before you in person at the public hearings at Parliament House,' et cetera. It continues: 'One can only hope that this inquiry will lead to satisfactory outcomes for the Australian wheat industry, which I now believe is in a serious state of flux, with grave concerns for its future prosperity and stability.

'I along with 50 of my grower colleagues attended the Senate inquiry into Australian wheat exports on 22 April 2008. The inquiry was chaired by Labor Senator Glenn Sterle, and those of us in attendance were shocked by the bipartisanship of the Liberal and Labor senators, who were as one with their hostility towards the single-desk national-pooling legislation. We were also shocked by the contempt that was shown to growers and their forebears, who had arguably developed one of the finest wheat-marketing arrangements that the world has ever known. That these arrangements are the envy of wheat growers across the globe and had given Australia a reputation for quality wheat and after-sales service appeared to mean nothing to the Liberal and Labor senators who sat on the inquiry, and it was obvious that the findings and recommendations were a fait accompli.

'Former NFF leader and now chair of WEMA, Graham Blight, said that in 38 years of agri-political representation and advocacy he had never seen such contempt as he experienced during the wheat export debate. Mr Blight also said that, following deregulation, growers were left with no equity in the marketplace. The fact that our wheat assets have fallen rapidly into foreign hands and continue to do so with the current proposal of US giant Archer Daniels Midland to purchase GrainCorp comes as no surprise to those of us who have had a strong involvement in the wheat industry. In June 2008, the Rudd government, with the assistance of the Liberal Party, on what could be called one of Australian agriculture's blackest days, abolished the Australia's iconic wheat marketing legislation, which was widely known as 'the single desk'. The demise of this legislation began with the controversy over the Iraq-UN oil-for-food exposure and the failure of then Prime Minister John Howard to defend the interests of his nation and its wheat growers. He set up an inquiry, which was headed by Justice Cole, which became known as the Cole inquiry, with terms of reference designed to malign our national pool manager, AWB Ltd, and to absolve the government of any knowledge or blame. I believe that John Howard blighted his reputation over this issue, and many wheat growers to this day lay the blame for the loss of the single desk on him.'

Senator EDWARDS: What has this got to do with anything?

Mr Munro : What I am saying is that there is no legislation now, Senator Edwards, to protect the Australian wheat industry and the Australian wheat grower and, as a result, the industry has been put into a position where it is run by the merchants. We have merchants from the rest of the world coming here to take advantage of that situation. That is what I am on about.

CHAIR: All right. Now, just settle.

Mr Munro : I am settled, Senator Heffernan.

Senator EDWARDS: I cannot do anything about what happened 10 minutes ago or 30 seconds ago. If you have come in here to have a bash at all the people that you are blaming for what happened five minutes ago or 10 minutes, I am glazing over.

Mr Munro : With all due respect, Senator, I am putting a fair dinkum grower perspective on where the industry is at.

Senator EDWARDS: Have you read the terms of this inquiry?

Mr Munro : I have the terms of this inquiry in front of me, sir.

Senator EDWARDS: What has that got to do with what happened in 2006?

Mr Munro : It has a lot to do with it, because the industry has been set on a course to be taken over. It is being run by merchants. We have merchants coming here from across the world to take advantage of the situation.

Senator EDWARDS: Well, we are a free market. We are just trying to find out whether graingrowers are going to be served well by the takeover of GrainCorp by ADM. We are looking to put mechanisms in place that will hopefully enhance graingrowers and the people who have been served by GrainCorp. By coming in here to bash up John Howard and Kevin Rudd, you have just lost your credibility, I reckon.

Mr Munro : I do not mind, Senator, whether I have lost my credibility or not.

CHAIR: Have you finished your opening statement?

Mr Munro : I have some comments here in relation to the terms of reference. I have a point here which says: 'Are the current arrangements in the interests of Australia's farmers?' How could they possibly be when merchants are running the industry and running it to what suits them. We have already got a situation where our quality is slipping—alarmingly. The value that is being paid for our grain is dropping. We are losing our premium markets. We are hearing that our wheat is being comingled because we have multisource contracts.

Senator EDWARDS: I agree with you there.

Mr Munro : When it comes to servicing markets, on whose behalf are ADM and Cargill going to act? Will it be the United States or will it be us?

CHAIR: I imagine, Mr Munro, they will primarily act in the best interests of their shareholders.

Mr Munro : Exactly. What about when it comes to a political situation between countries? I cannot imagine that Cargill will favour Australia over the US.

CHAIR: If it were in their corporate interests, I am sure they would.

Mr Munro : You have banged away—pardon the expression, Senator Heffernan, but you have continually referred to it today—about ADM and corrupt behaviour—

Senator EDWARDS: Now you are going to verbal the chairman!

Mr Munro : and so that is no news to me. It is what I know about how the grain industry functions and what the Cargills, the Dreyfuses and the Glencores are quite capable of and the power they exert.

CHAIR: And the AWB.

Mr Munro : I am not so sure about the AWB at all.

CHAIR: I think Iraq demonstrated that.

Mr Munro : Were the AWB ever prosecuted for anything?

CHAIR: I don't want to have a debate. I am happy to do it, I am happy to take you through the Geneva desk and the Australian Wheat Board trading—

Mr Munro : I am happy to take you through as well.

CHAIR: Argentinean wheat into Iraq and all of that, but it is not for today.

Mr Munro : Senator Heffernan, with all due respect, Geneva could not trade without the veto of the pool. Let us get that straight. The Geneva desk could not trade in any market without the national pool having a veto.

CHAIR: With great respect, the Geneva desk traded Argentinean wheat into Iraq—

Mr Munro : They could not do it without—the national pool have the right of veto over any sale.

CHAIR: With great respect, they did it.

Mr Munro : They had the right of veto over any sale.

CHAIR: They also lost $230 million on one trade, which was put into the pool because they lost on the Chicago punt they had. But that is not for today. What do you have for us today?

Mr Munro : Somebody needs to sit up here and say why we are where we are, and that is exactly what I am doing. This is not accidental, the fact that you have ADM wanting to take over GrainCorp. You had Cargill take over the AWB, you had Glencore take over the South Australian grains industry, and now you have people wanting to take over the Western Australian grains industry. Because the counter-levering power that the legislation gave Australian growers and the Australian nation has gone, these foreign traders are heading to Australia because they know we are one of the most significant exporting nations in the world and that they can make a motza out of us. Somebody needs to sit down here and say that, and that is what I am doing.

CHAIR: Fortunately, when AWB was trading—and AWB still exists in a corporate form—they, like everyone else, offset their bet on the Chicago exchange. The last spike, when it reached $500 a tonne, was nothing to do with global supply; it was to do with something have a position on the Chicago exchange. That is the reality. AWB took positions on the Chicago exchange.

Mr Munro : It is interesting that you talk about AWB. They had a fantastic hedging arrangement. They hedged the wheat on behalf of Australian growers and they were very successful at it.

CHAIR: They traded their position as an insurance policy, like everyone else, through the exchange.

Mr Munro : And they had an obligation to pass—

CHAIR: We hear what you are saying, but in terms of today's hearing and the terms of reference, give us a few pearls of wisdom.

Mr Munro : You are talking about Australia's long-term food security interests. You tell me: who is obligated in Australia to hold stocks for the domestic market? Were you listening to the Country Hour last Friday? We are just about out of wheat on the domestic market. What would happen if there was a drought?

CHAIR: I suppose what happened last time there was a drought, where we nearly copped ourselves with karnal bunt, and that was in the days of AWB.

Mr Munro : It is going to be a lot worse this time because no-one is obligated to carry stocks. There is no statutory obligation. We are nearly out of wheat. These people have sent all the wheat out of Australia and we are being told that there is very little wheat left in New South Wales. Where would we be if we were staring down the face of a major drought?

CHAIR: I do not know what that has to do with it.

Mr Munro : It has a lot to do with it. You have the question here. You have Australia's long-term food security.

Senator EDWARDS: Your proposition is that if Russia is in drought, North America is in drought and Australia's is in drought there is not going to be much grain around.

Mr Munro : Would you not think it would be a good idea if we had a legislative arrangement so that we might keep some stocks back to service our domestic market? That is what we did under wheat stabilisation.

Senator EDWARDS: But is that proposition a reality? Has that ever happened before there is not enough wheat grown in the world to service markets? Wheat travels all around the world.

Mr Munro : I am saying that under the legislative arrangement we had a facility that stored grain for the domestic market.

Senator EDWARDS: That argument could be used for gas, too.

CHAIR: With great respect, when Simon Crean nearly left and Collins from the Northern Territory became minister for agriculture, that was long before the removal to the single desk. Why did we run out of wheat if we had this arrangement you talk about?

Mr Munro : If we ran out under a legislated arrangement where someone was making an effort to stock then what is it going to be like when there is no arrangement at all? Then you will have the same people who exported the wheat are going to be holding the government to ransom.

CHAIR: We are relying on rank and strength to make sure that does not happen.

Mr Munro : Well, we get lectured by politicians day after day on how we have to organise our business activities to handle a drought. But what are we doing as a nation? It is a bit rich, isn't it, for the politicians to lecture us on drought preparedness? What is Australia as a nation doing?

CHAIR: Don't include me in that lecture.

Senator EDWARDS: I do not lecture anybody about how to prepare.

Mr Munro : That is not what we hear from where we are.

CHAIR: With great respect, Mr Munro, if you are a good farm manager, you do not have to be lectured about the eventuality of a drought because you prepare for that. It is part of being a good farm manager.

Mr Munro : Then why isn't Australia preparing for a drought?

CHAIR: When we did, under your proposal, run out of wheat, it did not make any difference. We ran out of wheat. What happened to the contingency plan?

Mr Munro : As it turned out, we did not import a lot of wheat at all.

CHAIR: No, but we still, under your contingency plan, ran out of wheat. And the reason we did not import a lot of wheat was the season breaking, and we bloody near brought Karnal bunt into the country. Anyway, I love your passion.

Mr Munro : Do not patronise me, thanks, Senator.

CHAIR: Oh dear, oh dear! So have you done all you want to do?

Mr Munro : You have here: 'There is a potential for conflict between the responsibility to shareholders and the best interests of Australian producers.' Why would you expect a shareholder-driven company to put the interests of Australia or Australia's producers first?

CHAIR: What is the difference? Elders or Wesfarmers—they are all the same.

Mr Munro : Yes.

CHAIR: So what is the argument?

Mr Munro : Why the question? Isn't it perfectly obvious? That is in your terms of reference.

CHAIR: If you would like to get yourself elected to the Senate and change the terms of reference of the committee, you are most welcome.

Mr Munro : You have another. I have just touched on the supply chain costs and the fact that, in this competitive market that growers have had foisted upon them, we have seen our freight costs increase by 35 per cent in five years. Once again, that is because there is no legislated pooling arrangement to leverage the providers. I think Mr Greentree said our costs had doubled. But ADM—

CHAIR: But, as you are aware, Mr Greentree himself is, shall I say, in terms of 'grower', a major exporter.

Mr Munro : No, he is not a major exporter. As far as I am aware, he has let his licence slip. He does not have a licence anymore.

CHAIR: I am not going to have an argument about Mr Greentree's business affairs. Senator Nash?

Senator NASH: Thanks, Mr Munro. What I am interested in specifically is this issue. Obviously the structure of GrainCorp is: it is a commercial entity responsible to shareholders, as ADM would be. In your view, why would it be more of a risk—if that is your view? Is it more of a risk to go from GrainCorp to ADM, and why? We have got the current structure of GrainCorp; we cannot change that; that is what we have at the moment. It is a publicly-listed company. So what is the downside in your view of moving to ADM, if there is one? That is what this is all about.

Mr Munro : ADM is a foreign company. The boardroom will be in the midwest of America. At least with GrainCorp being an Australian company listed on the Australian Stock Exchange, I believe that governments, both state and federal, would be in a position to exert far more pressure on the company through legislation. That is not something we could ever do with a company being run from the United States of America.

Senator NASH: That is very clear. Thank you.

Senator EDWARDS: It still has to comply with ASIC regulations, Mr Munro.

Mr Munro : What regulations are there, at the end of the day? We had the GPA people here. They were in no hurry to have mandatory codes of conduct. They will mess around and carry on for years if they can get away with it.

Senator EDWARDS: I agree.

CHAIR: So do you have a different position from New South Wales farmers?

Mr Munro : I may have a slightly stronger one. I would make the point that the New South Wales Farmers' Grains Committee resolved that we block the sale. We also thought that the government should look at alternative arrangements. Some of us believe that there is a chance there for the government to buy back GrainCorp and convert it to a co-op.

CHAIR: It might be beneficial for the committee if you explain to us why you were sent on leave without pay from the New South Wales farmers. What was that all about?

Mr Munro : That has nothing to do with this.

CHAIR: It has about as much to do with this as what you are talking about.

Mr Munro : It has got absolutely nothing to do with this, Senator Heffernan.

CHAIR: I am only pulling your leg.

Mr Munro : The other point I was going to make is this: as far as this foreign investment business goes, I would like to make the point this is not an investment this is a clear sell out, and to say that Australia has not got the money, cannot create enough cash to invest in its own industries, is a complete fallacy. The money that built these assets came from the land. We created that money ourselves and built these assets. To say that we cannot go on updating those assets and continue to improve them is just a nonsense.

CHAIR: So are you saying that we should lock the gate on foreign investment?

Mr Munro : I am not saying that at all, but I do not believe that we should be selling our country out and I do not believe we should be demeaning ourselves as Australians that we cannot finance our own operations. We have done that.

CHAIR: If the capital that is in Australia, locked up in super funds et cetera, is not adventurous enough and is not patient enough to invest in this sort of infrastructure, then it is not our decision as farmers to somehow put a gun to their head and say, 'We want your money'. The market sorts out who invests in the market.

Mr Munro : If we had the right sort of structure, if we had cooperative style structures like the Western Australians have and the South Australians had until they sold everything off, we are perfectly capital of creating wealth out of our own land and putting that back into these structures without tearing huge profits out of them. When you come to think of it, GrainCorp, even though it was a statutory cooperative arrangement, that money came from the crops. You would know as well as I do, Senator Heffernan, everything that we do on our farms we finance out of our wheat crops.

Senator EDWARDS: So should we ban the Chinese investment in mining in this country?

Mr Munro : I am not 100 per cent comfortable with Chinese investment because it is a communist state.

Senator EDWARDS: Okay then, what about American investment or British investment?

Mr Munro : There is a lot of difference between a mine and farm. The farming land has generally been developed. It just needs recurring expenditure. The development has been done.

CHAIR: I want to get us back on track. This is about the grain industry, not about agricultural land. That debate is worthwhile having, but not today.

Mr Munro : I am just answering the question, Senator Heffernan.

CHAIR: If you would like, I might even make a presentation to you of the committee's foreign investment report. Would you like to take that home—

Mr Munro : I follow it pretty closely, but I think we had better—

CHAIR: There you go; I will give you a present.

Senator STERLE: He rarely gives anything away.

Mr Munro : Another thing I wanted to say is that every Anzac Day we have politicians trotting out the Anzac legend about what we have fought to defend, yet we are perfectly happy to sell our country off and demean ourselves in the process.

Senator STERLE: Hang on—

CHAIR: With great respect, you should read what we had to say, which included 29 recommendations. This included a complete update of the Foreign Acquisitions and Takeovers Act. There are a whole lot of things in the national interest. I think you are being a little unfair.

Mr Munro : I am not so sure. I see these things as a farmer at Rankin Springs.

Senator STERLE: You just don't have to pollie bash mate.

Mr Munro : I do not have to play the political game. I see these things—

Senator STERLE: You are just having a pollie bash.

Mr Munro : I beg your pardon?

Senator STERLE: You are just having a pollie bash.

Mr Munro : A pollie bash?

Senator STERLE: Yes.

Mr Munro : Well aren't you our representatives?

CHAIR: I don't mind.

Mr Munro : The country is being run by a corporate—

CHAIR: You sooked on me a while ago though, when I had a crack at you: 'Don't you be whatever you said to me, Senator Heffernan.' You sooked. You did not want to be bashed.

Mr Munro : You can bash me all you like, Senator Heffernan. I can take anything you will give to me.

CHAIR: You said that was whatever it was—demeaning or something. Anyhow, I love you dearly and if you pray for me, I will pray for you. We are grateful for your attendance today and thank you very much for coming up.

Mr Munro : Has this been tabled?

CHAIR: Yes. It is the report that is in our report, is it? It is your submission?

Mr Munro : Yes.

CHAIR: Yes, we have already—would you like a copy of the submissions as well.

Mr Munro : I would not mind actually, thank you, Senator.

CHAIR: We will point you to it on the website.

Mr Munro : Okay. Thank you very much for the opportunity.

CHAIR: God bless.

Evidence was then taken in camera—

Committee adjourned at 16:57