April 22, 2008

 

Australian wheat group fears regional monopolies will emerge

 

 

Australian lobby group Eastern Wheat Growers Tuesday called for minor changes to draft legislation to liberalize Australia's wheat export arrangements, but is in broad agreement with the proposed new law.

 

Angus McLaren, a representative of the group, told a Senate inquiry the proposed new export arrangements will benefit the economy, the wheat industry and growers.

 

Eastern Wheat Growers have concerns however, as do some others, about the possible emergence of regional monopolies in a liberalized export market based on the catchment areas of Australia's three major grain handling and export concerns: ABB Grain Ltd. (ABB.AU), GrainCorp Ltd. (GNC.AU) and unlisted Co-operative Bulk Handling Ltd., he said.

 

But these problems can be overcome through the application of good competition policy, he told the Senate Rural and Regional Affairs and Transport Committee Inquiry into the Wheat Export Marketing Bill 2008 and Wheat Export Marketing (Repeal and Consequential Amendments) Bill 2008.

 

A self regulating industry solution would be a much better resolution to concerns about regional monopolies than introducing a whole new layer of outside regulation, he said, but if the industry cannot resolve this, then some external regulation might be necessary.

 

McLaren also raised concerns about the proposed accreditation system to license new exporters, suggesting that, if the system proved in a review after three years of operation to be of no benefit, then it should be scrapped.

 

Individuals and cooperatives should also be allowed to gain a license to export bulk wheat, he said.

 

"It almost appears the legislation is designed to limit the export of Australian wheat to a few big grain traders," he said.

 

More exporters will generate greater competition and higher prices for growers, he said.

 

To assist the operation of the market, the lobby group called for timely industry information to be made available about production, stocks and exports, he said.

 

New export arrangements from July 1 will end a protected system that since World War II saw AWB Ltd. (AWB.AU), operate an export monopoly or, in recent years, dominate exports.