Single desk costs offset gains

24 Mar, 2004 10:00 PM

NATIONAL Competition Policy (NCP) president Wendy Craik was a brave woman to front delegates at the WAFarmers conference last week.

From the outset, the former National Farmers Federation chief executive admitted that she felt like Daniel in the lion's den.

Dr Craik was well aware that WAFarmers president Colin Nicholl had recently told the media that NCP had no place in agriculture, and that opening up wheat's single desk to competition would not benefit Australian consumers, nor WA farmers.

She said single export desks had their benefits, but also costs, to the community.

"Single desks are a significant restriction on competition and cannot be quarantined from periodic scrutiny," she said.

"The key benefit most often used to justify their existence is that they increase returns to producers, but this is not always true."

She said there had been a number of single export desk reviews conducted by review teams which were appointed by government.

"Reviews take into account costs and benefits, and the focus is on outcomes that benefit the whole community rather than providing special treatment for certain groups at the expense of consumers generally," Dr Craik said.

"Various independent reviews of single export desks have found that any increase in return is usually quite small.

"The 2000 NCP review of the Wheat Marketing Act found it increased export prices by US$1/tonne between 1997 to 1999," Dr Craik said.

"But that benefit must be offset by any additional cost that single desks may impose on the community."

Dr Craik said the state government's new grain licensing regulations had given graingrowers more options to market barley, canola and lupins, and some growers welcomed that choice.

"In effect growers can have their cake and eat it too," she said.

"The National Competition Council will assess this year how well the new grain licensing arrangements have worked and if WA has met obligations its obligations regarding grain marketing, will recommend lifting suspension of some of the government's competition payments to WA."

Conceding that the agricultural sector had been through a difficult period, Dr Craik said the belief that NCP caused hard times ignored world market conditions, changes in technology and population drift which have all had significant effects.

She said there had been significant departures from some sectors within Australian agriculture.

"But many farmers and communities have benefited from deregulated marketing arrangements also," she said.

"As general consumers, farmers have had the benefit of low inflation, low interest rates, high productivity, more choice and better prices, and those gains have to be taken into account when assessing the value of the NCP.

"The economic reforms have been successful and Australia now has a stronger and more flexible economy."

Dr Craik conceded that many people had left the dairy industry and were still waiting to see the long term benefits following deregulation.

"I acknowledge that there have been difficult times in the dairy industry but in the long term, the benefits will be there to be seen," she said.

"Deregulation was going to happen anyway due to Victoria's prominence within the marketplace."

Dr Craik said there was a general misunderstanding that NCP was a body which imposed economic reform on states.

"This is reform that had previously been agreed to by the states," she said.

"It was a process that started under the Council of Australian Governments in 1995.

"NCP has never been in reckless pursuit of competition for its own sake, but it is a policy that is grounded in promoting the public good."



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