Wheat export marketing arrangements

Marketing International trade Policy Rural conditions Industries Australia

This inquiry assessed the operation of the current wheat export marketing arrangements, including the costs and benefits, and now informs the Australian Government on the effectiveness of the arrangements.

These key points were released with the Wheat Export Marketing Arrangements inquiry report on 28 October 2010.

  • The transition to competition in the exporting of bulk wheat has progressed relatively smoothly, particularly given difficult international trading conditions — a pronounced commodity price cycle, the global financial crisis, and exchange rate appreciation.
  • The regulatory arrangements for marketing bulk wheat exports have been beneficial during the transitional phase since deregulation. They have given growers confidence in adjusting to deregulation and facilitated the rapid entry of 28 accredited traders, with 12 million tonnes exported to 41 countries in the first year after deregulation.
  • A range of marketing options have become available since deregulation. However, some growers prefer the previous single desk arrangements.
  • The benefits of accreditation of traders will rapidly diminish in the post transitional phase, leaving only the costs. The accreditation scheme, Wheat Exports Australia and the Wheat Export Charge should be abolished on 30 September 2011.
  • The port terminal access test has provided greater certainty for traders and made access easier, more timely and less costly than it could have been by relying on potential declaration under Part IIIA of the Trade Practices Act.
  • However, there are still some transitional issues associated with port access and contestability in the logistics supply chain. The access test accordingly should remain a condition for port operators to export bulk wheat until 30 September 2014.
  • The benefits of the access test will diminish and could become costly in the long term without the checks and balances of Part IIIA of the Trade Practices Act. From 1 October 2014, regulated access should rely on Part IIIA, with continuation of mandatory disclosure, supplemented by a voluntary code of conduct by all port terminal services operators.
  • There is evidence that increasing on-farm storage, and competition between road and rail, are leading to improvements in supply chain efficiency. However, it is important that the regulatory arrangements enhance efficiency in the transport and storage market by facilitating contestability.
    • The Commission supports the decision by the ACCC to review the exclusive dealing notification in relation to Grain Express in Western Australia.
  • The level and allocation of investment in road and rail infrastructure by governments should be based on rigorous cost-benefit analysis, with a focus on developing economically and socially efficient logistics chains.
  • Monthly information by state on stocks, exports and domestic uses facilitates an efficient wheat market. Industry should consider funding its continuation.
  • The provision of most other 'industry good' functions is best left to the industry.

Image: Bern@t / flickr

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