First wheat, now barley?

12 Jul, 2007 07:00 PM

PROFARMER Australia managing director Richard Koch has taken a swipe at WA¹s regulated barley market, calling on the State Government to explain its interference and its reasoning behind the system.

Mr Koch, whose weekly agricultural newsletter provides expert analysis of national and international grain markets, said the recent deregulation of major export barley markets in Canada and South Australia had created positive selling environments for those growers, free of political encumbrances.

He warned government interference in WA was stripping valuable income off local farmers, and called on State Agriculture Minister Kim Chance to justify the Grains Licensing Authority¹s (GLA) restrictive involvement in barley marketing.

Mr Koch said WA¹s regulated barley market was causing many growers to miss out on recent high prices for their produce, while local industry was also being denied valuable opportunities.

He said he was frustrated by the system and could not understand the rationale behind it.

³Can someone please explain the economic case for the retention of a regulated barley market in WA?² Mr Koch said.

³And if the reason is not economic, then what exactly is it?

³Is it ego, do our politicians just like the control or are they just being conservative and hiding behind the protection of legislation just to avoid the possibility of making a mistake?

³Either way it looks like being another example of a growing endemic problem in WA where the Government is allowing red tape to get in the way of business.²

Mr Koch said international feed barley markets had gained $40/t in recent weeks to be trading at levels rarely seen at this time of year, and were at record levels in terms of $US/t.

He said the trading frenzy was being driven by traders short of grain into the Middle East, following the failure of crops in the Ukraine and a subsequent ban on grain exports from that region.

Under the Grain Marketing Act (2002), the Grain Pool holds the single-desk rights to export WA¹s barley, lupin and canola crops and also deals in pulses and cereals through its trading subsidiary, AgraCorp.

But the difference to the wheat industry is that the GLA holds the power of veto on barley, canola and lupin exports and not the company responsible for managing the single desk.

Agriculture Minister Kim Chance said the statutory marketing of WA barley and lupins was largely historic and similar to the single desk approach for wheat.

Mr Chance said statutory marketing, particularly for export markets, was set up as it was seen as one of the best ways of achieving good prices in the marketplace.

He said barley marketing in WA was partially deregulated in 2002, with the introduction of the GLA.

Mr Chance said the reasons behind WA¹s regulated barley market were economic.

³It enables premium prices to be extracted for barley in some markets and also assists in being able to organise forward selling, risk management and shipping, if markets have certainty of acquiring a whole crop,² Mr Chance said.

Mr Chance would not say if SA¹s decision to deregulate their barley export market recently had opened the door to the likelihood of it happening in WA, but he did confirm that it would be a consideration during a statutory review scheduled later in the year.



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