Chapter 5
Conclusions
Overview
5.1
This inquiry examined the provisions of the Wheat Export Marketing
Amendment Bill 2012 (the bill), which aims to fully deregulate the wheat export
market by 1 October 2014, and its implications for industry. This report concludes
the committee's detailed consideration of the wheat export industry reforms,
which was first brought before the committee in 2008.[1]
5.2
The committee received 18 submissions from a range of industry groups,
including grain growers, exporters and bulk-handling companies (BHCs). The
committee held a full day public hearing on 14 May 2012 at which
representatives from a number of submitting parties, as well as representatives
from government organisations and industry observers, provided evidence.
5.3
The committee acknowledges that the wheat export industry has been
rapidly adjusting to changes since the government's original decision to
deregulate the wheat export market in 2008. The committee commends all industry
stakeholders for their resilience in the face of change, as well as the
initiatives undertaken by various parties to negotiate through remaining
concerns.
5.4
A range of issues were examined during this inquiry. In particular, in
anticipation of the deregulatory impacts resulting from the bill, grower groups
raised concerns in relation to the development of an effective industry
voluntary code of conduct as well as wider industry access to wheat stocks
information.
5.5
The committee thanks industry participants and observers for the
relevant and highly informative submissions to this inquiry and for answering
the committee's questions during the hearing.
Voluntary code of conduct
5.6
In anticipation of repeal of the Act, the committee understands that
industry stakeholders are currently in discussions, through the Code
Development Committee convened by Grain Trade Australia (GTA), to develop a
voluntary code of conduct on port access. The committee commends all
participants and observers taking part in this process on their initiative to
adjust and adapt to deregulation of the wheat export market.
5.7
Through assessment of the evidence received in the course of this
inquiry, the committee is of the view that the process to establish a port
access voluntary code of conduct has the potential to encompass other important
issues such as access to wheat stocks information. The committee encourages
participants to broaden the mandate of the GTA Code Development Committee to
consider incorporating other important industry issues into the voluntary code
of conduct.
5.8
The committee notes that the guidance provided by the Australian
Competition and Consumer Commission (ACCC) on the development of industry codes
of conduct is a particularly useful document, and that effective codes of
conduct should have provisions that address the interests and concerns of all
involved in the drafting process. It is in this light that the committee
recognises more can be achieved through the current GTA Code Development
Committee consultation process to address the widely expressed concerns on
access to wheat stocks information.
5.9
Although the committee did not receive conclusive views from witnesses
on whether the code of conduct should be mandatory, the committee notes that
accountability mechanisms should be drafted into the code of conduct to ease
grower concerns on the degree of commitment expected of each participating
party.
5.10
The committee appreciates that the Minister will ultimately be required
to approve the code of conduct before full repeal of the Act can take place,
thereby providing the committee with an assurance that the protections
currently afforded under the access test will remain until industry concerns
are more fully settled.
Access to wheat stocks information
5.11
The committee received numerous comments, through submissions and during
the hearing, on the importance of having access to information on wheat stocks
in order to make informed commercial decisions. The committee agrees with
evidence from market participants and observers, including the Australian
Securities Exchange (ASX) and the Productivity Commission, that access to such
information is crucial for the operation of an efficient market.
5.12
The committee notes that the predominant market positions occupied by many
BHCs have resulted in the trading operations of certain BHCs appearing to have
exclusive or preferential use of detailed wheat stocks information that is not accessible
by other traders or growers. This situation has generated significant concern
among grower groups that wheat producers are not able to access the best price
for their wheat stocks or to commercially plan which crops to grow.
5.13
The committee commends certain BHCs for their initiative to voluntarily
disclose a greater amount of information on wheat stocks to participants
throughout the supply chain. The committee encourages BHCs, grower groups and
exporters to continue discussions through industry forums, including through
the GTA Code Development Committee, to develop agreed expectations and methods
to address information flow concerns, including through the publication of
de-identified aggregated data.
5.14
The committee also received evidence from grain grower groups that,
rather than dissolving Wheat Exports Australia (WEA), the organisation should
be given a revised monitoring or advocacy role by government. The sentiment
expressed in a number of submissions by grower groups was the concern that
Australia's main wheat export competitors – the United States and Canada – both
have national regulatory bodies to ensure the quality of exported grain and
undertake international advocacy efforts to increase trade. Without an
equivalent body in Australia, grain growers submitted that the Australian wheat
industry could be left at a considerable disadvantage.
5.15
The committee recognises the valuable work carried out by the WEA under challenging
and changing industry conditions, especially in light of the phased
deregulation of the wheat export market. The committee acknowledges that a
national oversight mechanism or body for the industry could be beneficial, and
that, in the first instance, this issue should be considered and agreed upon by
industry participants.
5.16
The committee is of the opinion that the role of government in
supporting industry discussions is crucial. While the intention of government
is to deregulate the wheat export market, it is imperative that the government remain
active in assisting and facilitating industry dialogue, as well as fulfilling
an attentive observer role.
5.17
The committee notes that Single Vision Grains Australia (SVGA), a prior
government-sponsored initiative to support increased information flow and
efficiency throughout the wheat export supply chain, was unsuccessful because
of lack of industry cooperation on the future of SVGA. The committee urges all
industry participants to take greater ownership of any industry-led initiatives
in the future, including through broad financial support from industry
participants.
5.18
The committee notes that the government has committed to reinvest
surplus funding from the WEA Special Account back into the wheat industry after
consulting industry participants and relevant stakeholders. The committee
commends the government's intention to use the excess funds in such a manner,
and encourages the government to consider investing part of these surplus funds
to the production of wheat market information for industry.
Recommendation 2
5.19
The committee recommends that the Senate pass the Wheat Export Marketing
Amendment Bill 2012.
Senator Glenn Sterle
Chair
Navigation: Previous Page | Contents | Next Page