SAFF Grains Council President, Michael Schaefer, said the key issue for growers in a deregulated grain export market, that lacked the availability of accurate and timely stock information, was the inability to make informed selling decisions.
Mr Schaefer said WA and SA growers sold the vast majority of their grain into bulk export markets, making regular selling decisions for cash in addition to traditional pooling methods.
He said grain traders had greater grain stock information than growers but the bulk grain handlers, Viterra in SA, CBH in WA, and GrainCorp on the East Coast, had the complete picture, while growers were largely kept in the dark.
“If a grower doesn’t know what the grain stocks are, it makes it much harder to make a valued selling decision for their grain,” he said.
Mr Schaefer said if growers knew there was a lack of supply for a particular grade of grain quality, like Australian Prime Hard wheat, which contains protein content suitable for making specialty baking products like ramen noodles, they could hold onto their stocks to get a better price, or sell if there was over-supply.
“CBH, Viterra and GrainCorp have all the information but funnily enough they also have grain marketing arms too and therefore they’re capable of arbitraging the market to their advantage,” he said.
“The real gulf comes from the fact that too many growers don’t really understand how the supply chain works.
“It would be good if we could get some of these bulk handlers sorted out; that would put some more money in our pockets.”
In offering advice on the deregulated market, the US Wheat Associates (USW) say Australian grain producers need access to more timely and accurate market information, in order to get better value for their produce.
In the US, wheat growers benefit from quality information on grain sales and movements by using the USDA’s export sales registration system.
Once a week, the USDA compiles the report providing a concise record of all export sales during that period and its impact seasonal stocks.
Grain marketers are required to report their individual wheat sales out of the US; anyone selling 100,000 tonnes of wheat is required to report that transaction to the USDA the following day.
That information is then widely disseminated to all agricultural news sources and industry and is also posted on the USDA website.
Speaking to Rural Press in February 2009, USW Vice-President, Vince Peterson, said the service informed growers and the industry, of outstanding export sales and exports by country, region and marketing year.
Mr Peterson said it also provided a comparison of sales by region, on the previous year, and the drawn down on current stocks.
USW president, Alan Tracy, said the information source was extremely important, because it provided US wheat growers with an equal advantage in the market.
“The key thing here is that when things happen, that impact on the actual price of a farmer’s wheat, he or she should not be the last to know,” he said.
“That’s where I think your government has a very specific responsibility to make sure that your wheat producers at least have the opportunity of equal market knowledge, as the grain handlers, to whom he or she sells.
“The marketers don’t have to say how much they sold it for, they don’t have to say the price, only how much they sold.
“The price for the farmer is determined by the supply and demand situation so knowing how much is going out and to where, is a very important piece of information.”
Mr Tracy said the USDA export sales registration system did not require wheat sales to be reported, according to its different grades and quality.
“In our situation we do it by class but I don’t believe the marketers have to report specific quality information,” he said.
“What we are talking about is the immediate availability of information that affects price in the market place.
“Farmers need equal access to that information.
“If you have one company in Australia, be it Glencore or whoever, that has the opportunity for a sale, they have some right to some privacy, until that sale is concluded.
“But once that sale is concluded, then that information should be publicly available as to how much is sold and to which country.
“We don’t do it by customer we do it by country.”
Mr Tracy said the export sales registration system evolved in the early 1970’s, after what the US grains industry experienced an event called “the great grain robbery”.
“Russia came in (the Soviet Union) and they bought up millions of tonnes of wheat from multiple sources and of course no body knew about it until it was too late,” he said.
“The price of wheat shot up and the grain companies were hurt as well.
“They sold it thinking they had a great deal, but then the price shot up and they hadn’t covered themselves.
“The grain companies also benefit from this information because they are able to learn when their competitors have sold too.
“After the great grain robbery we instituted a number of changes and now we get the benefit of that lesson.”