PGA: AWB will not meet Japan's demand

26 Jul, 2001 07:12 AM
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THE Pastoralists and Graziers Association (PGA) has launched another scathing attack on Australia's single desk wheat marketing arrangement.

Through the PGA, eastern states grain trader Ray Brooks Pty Ltd managing director Chris Brooks said Australia stands to lose its lucrative noodle wheat market in Japan.

Mr Brooks claims the AWB Ltd is jeopardising Australia's position in the niche market by not supplying the noodle wheat ‹ when it is available ‹ that Japan demands.

And due to the dry season in WA, Mr Brooks said AWB didn't have enough noodle wheat stocks to supply the Japanese market.

The AWB has rejected these notions.

Mr Brooks said Japanese trading conglomerate Itochu asked to buy his 8,000t of Rosella noodle wheat, sampled it and were satisfied with the quality.

But Mr Brooks claims the Wheat Export Authority (WEA) refused him a permit to export based on the advice of the AWB that the grain was inferior and quality control measures were inadequate.

Mr Brooks appealed the WEA's decision but it was again rejected.

Mr Brooks said the WEA was supposed to run as a separate entity to the AWB but obviously was not.

"They are just another puppet for the AWB," he said.

He said Itochu then applied to the AWB for Rosella noodle wheat, but the AWB apparently couldn't supply it.

Making an even bigger push to get his wheat into Japan, Mr Brooks then openly offered AWB Ltd $50/t to let him get an export permit.

Mr Brooks said the 300,000-400,000t/year Japanese wheat buyer had informed since it had no option but to source this premium grain from other countries.

He said the buyer also regretted the attitude of "our AWB".

"Is this their role, to decide who they do and don't supply?" he said.

According to Mr Brooks, AWB since withdrew its accusation that his grain was of inferior quality and offered him $215/t delivered port.

"The Japanese are paying $US175 DCT (delivered container terminal), which amounts to just under $A350/t," he said.

"I want WA growers to know what the Japanese market is paying compared to their returns".

Mr Brooks also said he could not understand why WA noodle wheat growers were accepting more than $100/t less than the world market price.

In addition, Mr Brooks said WA graingrowers were taking $30/t less than world market prices for barley, $20/t less for wheat and $25/t less for canola.

When he questioned the Grain Pool of WA about price differentiation between the east and west, he said the GPWA gave the following reasons for the shortfall:

pBecause of the pooling operation, and

pMore competition in the east, therefore the market is more liquid.

AWB national pools general manager Sarah Scales said most of Mr Brooks' statements were unsubstantiated claims.

Ms Scales said Mr Brook's claim that AWB couldn't supply Rosella noodle wheat was factually incorrect.

She said AWB always carried over stock in preparation for bad years, no-one she knew of said his grain wasn't up to scratch and there was no way AWB could make a decision about export permits because that was up to the WEA.

"It is easy for a private trader to cherry-pick the market and quote prices at a point in time," Ms Scales said.

"Mr Brooks is misrepresenting the pooling system that markets wheat to the best paying market over a period of time".

As far as Ms Scales is aware, he hasn't offered the AWB $50/t to get an export permit, which the AWB couldn't supply, and saw the offering as a bribe.

"It is unconceivable and we wouldn't tolerate that kind of behaviour," she said.

"We consult with WEA on whether a permit would impact on Australia's markets, then WEA makes a decision on a brief from AWB".

The AWB brief said the AWB didn't think it (the application to export) would benefit the national pool and the system in Australia.

Ms Scales said Japan was a premium key market and the AWB already had a program to supply a specific quality grain.

She said the AWB looks at each export application on a case-by-case basis and if it is against their strategies or impact on the national pool, advice is given to WEA.

"We have said yes to some permits and are not in the game of stifling markets," she said.

"We're protecting the revenue stream to Australian wheatgrowers and participants in the Australian wheat pools, not to private traders.

"Our obligations are to manage exposure, promote Australian wheat, maximise returns to pool participants, service customers and executing logistics in a superior manner and not ruin overseas markets".

Wheat market deregulation advocate PGA economics and business management chairman Lynne Johnston said competition between private companies gives producers the opportunity to take a bigger share of the cake and less to shareholders.

Ms Johnston said there needed to be a balance between price to shareholders and price to growers.

"When you are a seller, you want the best price not returns to shareholders in the form of dividends," she said.

"WA graingrowers are having to be price takers and not product marketers.

"You cannot be a marketer if you are forced by law to be a price taker".

To back her statement, Ms Johnston said by not being a price taker but a grain marketer, she made more money from her feed wheat by selling it to chicken farmers and not the AWB.

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