March 13, 2008

Australian senate urged to pass wheat export law to protect producers

Australian wheat producers will face "enormous uncertainty" in marketing their crop if the parliamentary opposition doesn't agree to planned changes to wheat export arrangements to come into force from July 1, 2008, said agriculture minister Tony Burke on Thursday.

If the current legislation, which lapses on June 30, isn't changed, there will be no protection for producers from the possibility of anticompetitive behavior and there will be no protection for producers in the form of a probity test on exporters, he said.

"Producers need the certainty of knowing that the buyers of their wheat have the reputation and financial backing to pay for their crop," Burke told the parliament in a ministerial statement on planned changes to wheat export arrangements.

Essentially, the government plans to accredit multiple wheat exporters, effectively ending a protected system that has seen AWB Ltd. either operate an export monopoly or remain the dominant exporter since World War II.

Concern was raised as to whether the changes would impact the willingness of banks to lend money to producers, Burke said.

"I have met with the Australian Bankers Association, who confirmed that the marketing changes will have no detrimental impact on producers obtaining finance," he said. The legislation has been referred to a Senate rural and regional affairs and transport committee for inquiry, which will now report back by April 24, he said.

A number of domestic grain companies and international commodity traders, including members of the Australia Grain Exporters' Association, want to compete to export Australian wheat. No fewer than 10 companies will apply for accreditation as bulk wheat exporters.

Australia exports up to 18 million tonnes of wheat a year, worth up to AU$5 billion (US$4.7 billion), accounting for more than 15 percent of the global wheat trade.