Push To Break Wheat Monopoly
The Age
Thursday February 6, 1992
Eight multinational grain traders have joined forces to break the Australian Wheat Board's monopoly of the $2billion export wheat market.
The companies include some of the world's biggest international commodity traders, including ConAgra, Louis Dreyfus, Cargill and Continental Grains.
Under the umbrella of the Australian Grain Exporters' Association, the traders have mounted a campaign to push for the total deregulation of the export market and have started discussions with the Federal Government.
The group called a news conference at the Rural Outlook conference in Canberra yesterday to announce its plans. The executive director of the association, Mr Bob McCarthy, said the group's aim was to capture 50 per cent of the market within five years.
Mr McCarthy said the board's monopoly was hindering competition and efficiency. He challenged the view that there was a price advantage in the board maintaining its single-desk export status. There was a lot of fat in the statutory marketing system and costs could be cut by an estimated $20 to $30 a tonne, he said.
His comments brought an angry response. The chairman of the board, Mr Clinton Condon, said the traders simply saw an opportunity to ``get their hands on the most significant supply of white wheat in the world with a reputation for quality built up over 50 years".
He said there were incentives for the traders, ``but I don't see traders adding anything to the Australian industry". The association was asking grain growers and the Australian people to believe that competition by multinational buyers would serve Australia better. ``These are the traders who currently get millions of dollars of American and European taxpayers' money in the form of export subsidies to support their business." Mr McCarthy, a former head of the board's marketing division, said industry was becoming increasingly frustrated with its inability to compete domestically and internationally because of the multitude of statutory controls, inefficiencies and hidden costs.
He said the association was not out to destroy the system or the Australian Wheat Board, but wanted open competition. The grains industry should take heed of the airline and banking industries, where partial deregulation instead of total deregulation was hindering progress.
Mr McCarthy said many people were dissatisfied with the plethora of statutory marketing boards in Australia. It was recognised that the potential for Australian food processing to supply Asia was hampered by statutory marketing. Deregulation would encourage investment in value-added ventures.
Mr Condon said debate on the the Australian grain industry was healthy, but people had to understand the stakes involved. The wheat industry was Australia's eighth largest export earner and was vital to the nation's prosperity. The board's status as a single-desk exporter had enabled it to squeeze premium prices from a highly corrupted world market, despite the pressures from more powerful competitors.
Earlier yesterday, the conference was told that wheat prices would rise 20 per cent on last year's record lows. Plantings this year would jump significantly following the big drop in production because of low prices and the drought.
© 1992 The Age