EAST coast growers have praised the federal government’s finalised mandatory code of conduct on port access arrangements for bulk wheat exports as “a massive step forward”.
Federal Agriculture Minister Barnaby Joyce will today announce the code has been signed off with Small Business Minister Bruce Billson and registered to take effect on September 30.
As revealed by Fairfax Agricultural Media last week, the regulations will contain three key elements that have been hotly debated in recent weeks in light of Western Australia’s strong push for total deregulation of wheat exports.
It will contain a three-year review rather than a five-year sunset clause; an exemption for co-operatives namely WA’s dominant CBH; and growers having a “seat at the table” during arbitration on disputes.
Speaking to Fairfax Agricultural Media, NSW Farmers Grains Committee chair Dan Cooper said the final code wasn’t perfect but was “a big improvement on what we had before”.
“It’s a massive step forward,” he said.
“Who knows when appropriate competition is going to arrive for the east coast supply chain?”
“Barnaby Joyce has done an excellent job listening to our concerns and making an informed decision, since the draft code was released earlier this year.”
Mr Cooper said critical commentary about the code’s exemption for co-operatives - in particular for WA grower-owned grains giant CBH - had failed to consider the different market structures.
He said while WA’s grains market was dominated by a grower-owned co-op in CBH, the east coast market was controlled by private, public companies that don’t return profits directly to growers.
Mr Cooper said WA had “the perfect market structure” where the co-op CBH gave growers ownership of the grains logistics supply chain.
“With a co-operative, the benefits of having that monopoly position in the market should flow through to the growers and if they’re not happy with anything that’s happening they can take it up with CBH directly and politics doesn’t need to get involved,” he said.
Mr Cooper said NSW Farmers’ number one demand was met - having a seat at the table for arbitration on supply chain disputes, especially logistics costs and pricing.
“If commodity prices were to double and supply chain costs went up with it, we wanted to be able to bring about mediation or arbitration if bulk handlers imposed an unjustified fee hike on us,” he said.
Mr Cooper said the notion of having a sunset clause in the code, rather than a three-year review, was “ridiculous”.
“Who knows when appropriate competition is going to arrive for the east coast supply chain?” he said.
“It may take one year, it may take 10 years, but to put a sunset clause in the code is just dumb because nobody knows when real competition will emerge - and you can’t just assume that competition is going to emerge.
“The east coast market does not have adequate competition today.
“One bulk handler with 70 per cent market share is not a competitive marketplace, especially if you compare that to Coles and Woolies, two major companies with 70pc combined share of the Australian retail market.
“There’s been too much talk about capacity in the system but the east coast market is very concentrated and competition needs to be measured on throughput, not capacity.”
“If they really want to aggravate east coast growers, supporting the disallowance motion will get everyone’s attention”
Mr Cooper also cautioned against the disallowance motion on the final code that NSW Liberal Democratic Party Senator David Leyonhjelm has threatened to introduce when parliament returns next week.
He said he’d been contacted by the Greens to discuss the issue and would also be seeking to hold talks with Shadow Agriculture Minister Joel Fitzgibbon.
Mr Cooper said the code was a legacy of legislation passed by Labor in the previous parliament, with amendments from the Greens, which put the code development process in train last year.
While the Greens have indicated they’d be unlikely to support Senator Leyonhjelm’s disallowance motion, Mr Fitzgibbon said he would need to see its details and discuss them with his party.
Mr Cooper said he didn’t expect the disallowance motion to succeed, but warned the ALP would be contradicting themselves by supporting it in any Senate vote.
“If they really want to aggravate east coast growers, supporting the disallowance motion will get everyone’s attention,” he said.
“This is a process they set up with the Greens which has provided a good outcome, so we feel they should support it.
“We’d also be happy to sit down and talk to Senator Leyonhjelm because we don’t get his angle here.
“We’re yet to speak to an economist who thinks the east coast grain handling market is competitive.”
Mr Fitzgibbon said the disallowance meant the “current weight of regulations” would remain, if it was successful.
“In my view that’s something that very few in the industry or the sector would consider a desirable outcome,” he said.
He also said Mr Joyce needed to better explain what the co-operative exemption meant, and other details in the final code.