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NSW Growers United on the Need for Wheat Oversight

02 October 2012

AUSTRALIA - AgForce QLD, NSW Farmers, Grain Producers SA, and Victorian Farmers Federation have joined together to reject the Government’s proposal to repeal the existing regulation of the export wheat market.

"As the major grain farmer representative organisations on the East Coast and in Southern Australia, we are united in our opposition of the Government's Wheat Export Marketing Bill," said Grain Producers SA Chairman Garry Hansen, "Instead, we join together to support an evolution of the existing regulation to better facilitate competition for our members' grain."

In response to competing claims that farmers need full deregulation to best gain benefit from the market, VFF Grains President, Andrew Weidemann, pointed to the present operation of supermarkets to debunk this argument.

"It is easy to see the impact on the small player when markets do not operate under appropriate rules, you simply need to look at the effect of supermarket power on farming families," Mr Weidemann said.

"The market power held by the bulk handlers is not that dissimilar to the supermarkets, favouring their own trading entities in the operation of supply chain infrastructure, like the placement of a homebrand product. They also gain an advantage by knowing the location, quality and movement of the grain owned by others within the supply chain." Mr Weidemann said.

NSW Farmers' Grains Chairman, Mark Hoskinson, outlined that the Government's Bill was in breach of the promise that the Labor Government made to grain farmers in 2008 to protect them from the market power of the regional bulk handlers.

"We are concerned that the removal of specialised wheat regulation in the present market will see the influence held by the three major bulk handlers inhibit competition. This would ultimately be to the detriment of the grain farmers our four organisations represent" said Mr Hoskinson.

"This market power", said Mr Hoskinson, "comes from the integrated nature of their grain receival sites, upcountry storage, and port terminal infrastructure; an advantage which is as much of a result of government legacy and grower contribution, as investment from private capital."

Wayne Newton, AgForce Grains President, outlined that the grain farming industry envisaged that the regulation of the market needed to move away from the unnecessary components of the present system which are no longer needed.

"Much of the cost of the present regulation comes from the approach that Wheat Exports Australia has been required to take to accreditation. While this was initially useful, it now detracts from the ability to perform other functions which would enhance the market's capacity to capture and distribute value among growers and traders" said Mr Newton.

"These functions include, providing a system which establishes standards that retain and build a premium on the world market for Australian wheat; maintaining fair access to port terminal services for third parties, including compliance with industry codes of conduct; and providing the market with transparency about the quantity and quality of stocks available in the supply chain."

"The grower members of our four organisations have formally supported these principles. We encourage all growers to use every opportunity and every organisation they are members of to do likewise," concluded Mr Newton.

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