January 30, 2008

 

Australia looks to wheat reforms to revitalise industry

 

 

A planned liberalization of Australia's bulk wheat export arrangements this year will revitalize an industry throttled by current complex regulations, according to a policy paper issued Wednesday (January 30, 2008) by the Grains Policy Institute.

Current arrangements that entrench dominance of exports by AWB Ltd. (AWB.AU) have been a huge barrier to development and innovation in the industry, according to the paper, entitled Principles for Reform of the Bulk Wheat Export Monopoly.

 

Current arrangements have isolated the wheat industry from global price signals and market dynamics, and as a result the industry has not matured beyond a 1950s style of centralized control, which has led to its current malaise, it said.

 

Liberalising export arrangements promises to "revitalize an industry that is struggling to respond to global and domestic market pressures, particularly rising input costs," according to the paper.

 

The institute is publicly supported by three of the four major Australian grain companies, namely Cooperative Bulk Handling Ltd., ABB Grain Ltd. and GrainCorp Ltd, members of the Australian Grain Exporters Association and grower groups supporting the removal of the wheat export "single desk," according to its Internet site.

 

A Labour Party government won office Nov. 24 with a plan to accredit multiple exporters of bulk wheat that will effectively end AWB's legislated dominance of the trade.

 

Agriculture Minister Tony Burke, who will be responsible for the changes, has not formally issued details of the Labor plan or its timing, though legislation covering current arrangements expires June 30.

 

Replacing the current system with a system to accredit multiple exporters will complete a reform agenda started by a Labor government in 1984, when feed wheat was removed from the Australian Wheat Board's compulsory acquisition powers, the paper said.

 

Broadly, the institute wants the new national system for wheat exports to mirror an accreditation system introduced in mid-2007 to cover barley exports from South Australia state.

 

"The lessons learned in South Australia from the removal of the barley single desk can be readily transferred to the wheat sector," it said.

 

Most, if not all, the organizations that will apply for bulk wheat export accreditation have already been granted licenses to export barley in bulk from South Australia, it said.

 

If this system is adopted, current regulator Export Wheat Commission could cease operations, it said.

 

The institute suggested that to achieve successful reform of the export system, all steps should be taken to ensure "the political mendacity at the core of the current regularity system is eliminated."