Grain Producers Australia welcomes the Federal Labor Opposition’s commitment to engage constructively and progress a key policy priority for grain producers, if elected on Saturday.
GPA’s 2022 federal election policy requests includes a long-standing call urging government to approve the Australian Competition and Consumer Commission to conduct an independent analysis of competition issues impacting the Australian grains market, to help safeguard growers.
Such a study has not been done properly since the bulk wheat export market was deregulated by the former Labor government in 2008 and is long overdue, to help resolve lingering competition issues.
This policy request is shared by national grain producer representative groups, recognising the need has amplified recently, amid escalating concerns about suboptimal grain prices being paid to local growers, compared to global pricing.
GPA wrote to both major parties and selected minor parties and independents seeking their responses to GPA’s 2022 election policy priorities, including backing the ACCC market study.
GPA Chair and WA grower, Barry Large, said Labor’s response was encouraging in stating that they intended to listen and further discuss the ACCC market study policy, if elected at this weekend’s poll, to better understand the current concerns of growers and industry, on why it’s needed.
“We’re also strongly encouraged by Labor’s interest to discuss the ACCC market study policy along with the merits of conducting a high-level strategic analysis of the infrastructure and investment needs of the Australian grains supply chain, to reduce grain freight costs, and what that means for both producers and consumers,” he said.
However, Mr Large said in contrast the Coalition Government’s response to the ACCC market study request was disappointing and supported the status quo continuing, in believing Australian grain producers are operating under a fair and level playing field.
He said this was despite GPA formally submitting this request to Minister Littleproud in mid-March, along with an evidence-gathering report conducted last harvest highlighting competition issues, and showing why the ACCC’s investigative powers are needed to properly conduct this market analysis.
“Among a range of serious findings regarding competition failures, GPA’s analysis and report found that about 25 million tonnes of grain is expected to be exported from the last harvest at a $50 per tonne discount,” Mr Large said.
“This equates to $1.25 billion loss to growers for the 2021/22 harvest, which was a record 62 million tonne return.
“We are calling on the government to utilise the ACCC’s special powers, to investigate how and why this significant value is being lost for local growers, rural communities and the national economy, while examining other critical issues regarding the misuse of market power.”
GPA Southern Director and Special Projects Manager, Andrew Weidemann, said a proactive ‘health check’ was needed to help move these competition issues forward for all market participants.
He said it can provide recommendations for government on reforms needed to optimise market competition and capture optimal value for Australian growers, industry and the national economy.
“GPA’s report from last harvest highlighted a pricing disparity that’s widened even more for local growers following the spike in global prices caused by the Russian invasion of Ukraine,” he said.
“This has also been the subject of ongoing media coverage and debate among growers and industry.
“However, the current government saying they’ll ‘continue to engage closely with industry on competition issues’, rather than implement an ACCC market study to deal actually with what’s occurring, is an excuse to do nothing and that’s just not good enough.
“This is especially disappointing given this government established the ACCC’s Agriculture Unit in 2015 to address specific competition issues in the agricultural sector, in order to protect growers who are ultimately price takers and therefore vulnerable participants in these supply chains.”
Mr Weidemann said rather than waiting for a competition crisis with market failure and multiple victims including growers, as has occurred with other agricultural commodities, those in power have an opportunity to be proactive and get ahead of the game, by engaging the ACCC’s Agriculture Unit.
“As the second biggest sector in Australian agriculture, the grains industry’s success is critical to achieving the stated goal of becoming a $100 billion industry by 2030,” he said.
“Optimising competition is critical to achieving this projected growth and ensuring we have a supply chain that’s fit-for-purpose and maintains and grows our international competitiveness in global markets. This delivers benefits for all supply chain participants, not just growers.”
Mr Large said he welcomed One Nation and the Australian Democrats replying to GPA’s election priorities positively, expressing support for the ACCC market study and all other policies. He said all respondents recognised the grains sector’s substantial contribution to Australian agriculture.
The Coalition’s overall response to GPA’s election policy document was extremely pleasing, he said, going above and beyond in highlighting current policy work and plans on all 12 policy priorities.
“Whilst disappointed we’ve not yet been given a proper and direct response to our ACCC market study request, we recognise the current government’s overall approach to agriculture demonstrates a strong commitment and understanding of the grain sector’s needs,” he said.
“This is particularly encouraging in key policy areas such as; boosting sustainability and economic resilience for growers and regional communities; strengthening biosecurity protections with tougher preventative measures; increased focus on local manufacturing to reduce input costs for growers on key inputs such as fertiliser and chemicals; and expanding market access for Australian grains.”