PERIODICALLY I get an early morning message from a grower still cranky that the AWB single desk was abandoned 13 years ago.
The grower has an over-inflated view of my role in its demise, despite the fact that I lobbied the committee and various politicians at the time, to build a new single desk system whereby export sales were run by a single desk, but the provision of all services from that point back to the grower were open for full competition.
The Liberal/National coalition lost the critical election and the single desk was removed, with little thought as to how a deregulated industry might move forward.
We have survived and the industry has moved forward with its new-found freedom, but we could be doing better.
Deregulation of the domestic wheat market 30 years ago led to an explosion of marketing techniques used by growers, including physical multigrade fixed price forward contracts, minimum price contracts, put options, call options, swaps and basis contracts.
These tools were used by growers in conjunction with deliveries to the AWB export pool.
They provided price risk management, as well as the ability to enhance pool returns.
The domestic cash market allowed growers to step around the AWB pool in drought years to make sure prices in low-yielding years were maximised.
Since then, regulation in the finance industry designed to protect consumers has limited the access to some tools commonly used by growers, and seen products that were of use, withdrawn by providers who are no longer willing to comply with strict new rules, or take on the risks of providing some products.
New services have emerged, including online grain trading platforms completely independent of the traders, and storage and handling providers.
They remain underutilised despite the payment guarantee afforded by the best of the platforms.
There are still pools on offer for those that hanker for the old single desk.
At least one pool operator is attempting to be quite clear how their sales program operates and actively encourages growers to use tools like put options (and other tools where appropriate) in conjunction with a commitment to deliver to their pool.
On-farm storage has grown, but it remains limited in the major export growing regions of the country.
The incumbent Bulk Handling Companies (BHCs) and their marketing arms have set the agenda by trying to offer all services to growers, and maximise the use of their storage networks.
By moving forward and using more of the services offered outside of the BHCs, growers will be able to drive change to the next level.
All service providers, including the BHCs, will then step up and begin to deliver more of what is needed.
- More information: email firstname.lastname@example.org or phone Malcom Bartholomaeus on 0411 430 609.