Chewing the fat over grain deregulation

29 Jul, 2011 04:00 AM
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Coorow grower Rod Birch (left), Australian Crop Forecasters director Ron Storey, CBH strategy manager Bryce Banfield, MarketAg adviser Nathan Cattle and Premium Grain Handlers' John Orr take questions during panel discussions.
Coorow grower Rod Birch (left), Australian Crop Forecasters director Ron Storey, CBH strategy manager Bryce Banfield, MarketAg adviser Nathan Cattle and Premium Grain Handlers' John Orr take questions during panel discussions.

NOBODY can dispute the 2008 deregulation of the wheat industry changed the future of grain marketing in Australia.

But it was National Party member for the agricultural region and forum chairman, Philip Gardiner, who said it best: "Some people will take a glass half full approach to deregulation while others will look at it as a glass half empty."

At the University of Western Australia (UWA) Institute of Agriculture's 2011 industry forum last week 62 members of the WA grains sector gathered to discuss the deregulation of the wheat industry and the challenges and opportunities involved for growers and marketers.

In its fifth consecutive year the annual industry forum brought together agribusiness professionals, grower group representatives, funding bodies, research heads and members of the UWA Institute of Agriculture external advisory board to discuss how they had coped and what would influence them in the immediate future.

Speakers included director of Australian Crop Forecasters Ron Storey, CBH strategy manager Bryce Banfield, MarketAg advisor Nathan Cattle, Premium Grain Handlers general manager John Orr and Coorow farmer Ron Birch.

Ron Storey believed the forum wasn't set up to argue the pro or anti-case for deregulation because it had already happened and there was no turning back.

"Deregulation is working and I give it a seven out of 10," he said.

"This forum is a health check on what we've got."

He said deregulation had proven positive for the wheat industry because Australia produced a record export program in the 2010/11 season, container trade had flourished, there were more buyers of Australian wheat, more marketing choices for growers, growers had been paid, there had been an expansion in grower advisory services, the industry had started to witness innovation and investment in the supply chain and there had been a number of new entries into the Australian industry.

"The wheat industry's health is much more determined by some positive global factors outside our control than whether Australia has a single desk or not," Mr Storey said.

"The signs look good but the question now is, how do we maximise our opportunities in these times."

MarketAg adviser Nathan Cattle's advice for growers was to take control of price risk management in order to succeed in the deregulated market.

He believed great opportunity existed in storage and logistics, traceability, food security, elements of production like climate change and genetic modification and the politics surrounding trade.

Premium Grain Handlers general manager John Orr echoed many of Mr Cattle's ideas and said deregulation offered up many logistical challenges throughout the country.

He said the past structure, built for a regulated export market, was less complex than the deregulated one which needed to accommodate WA's bulk loading auction system, rail considerations, the container trade, terminal capacity considerations and on-farm storage.

Coorow farmer Rod Birch knew about these complexities first hand.

He was glad deregulation had provided Australian growers with more choice and said the choice only needed to be as simple or as complicated as the individual farmer wished it to be.

But there was one major concern he outlined.

"Industry-good functions are falling through the cracks," he said.

"And that needs to be the industry's major focus moving forward.

"We need to know who is the manager of these functions and decide how they are to be funded."

UWA Institute of Agriculture Winthrop Professor Kadambot Siddique summarised the forum by saying the industry had witnessed the major grain crop and agricultural export capacity of Australia.

"World wheat production in 2009 and 2010 was about 685 million tonnes, the world stock levels ran at about 120mt and more than 100mt is traded on the world market year in, year out," he said.

"The world's average wheat consumption is about 97 kilograms a person every year."

Of which, the largest consumer per capita was Kazakhstan, where the population consumed almost 310 kilograms of wheat a year, equal to almost one kilogram a day.

Australia produces on average 18mt-25mt of wheat a year depending on rainfall and about 60pc of that is exported.

Of that, WA produces 40pc-45pc of Australia's wheat on a five year average.

"Deregulation is a topical issue and wheat will always be an important commodity, especially here in WA," Mr Siddique said.

"These kind of forums give us the opportunity to help drive industry when production trends have decreased over the last 10 years or so."

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READER COMMENTS

Jock Munro
29/07/2011 7:32:08 AM, on Farm Weekly

Ron Storey was a champion for deregulation. His scoring of the present system at 7 out of 10 is a clear indication that deregulation is not the success that Ron promised that it would be. His comment that the industry cannot go back to a regulated system is quite outlandish. Australia has given up the control of its wheat industry and in time it will become obvious to all and sundry that some form of national pooling will have to be reintroduced. Rod Burch laments the loss of the industry good functions-a deregulated marketing arrangement will never address this problem.
Reg U Lation
30/07/2011 11:10:40 AM, on Farm Weekly

Storey's story at UWA's Institute of Agriculture deregulation of the wheat industry forum began with his view that there's no turning back. And he's right. Deregulation has happened, it is working and growers now have a say and a greater investmebnt in what happens to their grain. Sure there might still be some fuzzy edges, but nothing savvy growers can't work around. Importantly, congfrats to Prof Kadambot Siddique and his forward thinking academics and researchers at UWA for providing a forum to discuss the present and the future, with just a hint of a look in the rear vision mirror.

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