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Wheat export marketing arrangements

Inquiry report

This inquiry report was released on 28 October 2010.

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Government response

  • Key points
  • Contents
  • 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.
  • Preliminaries
    • Cover, Copyright, Letter of transmittal, Terms of reference, Disclosure of interests, Contents and Abbreviations
  • Overview - including key points
  • Recommendations and findings
  • Chapter 1 Introduction
    • 1.1 What was the Commission asked to do?
    • 1.2 The Commission's approach
    • 1.3 Conduct of the inquiry
    • 1.4 Guide to the report
  • Chapter 2 The Australian bulk wheat export industry
    • 2.1 Evolution of the marketing arrangements
    • 2.2 Industry overview
    • 2.3 Industry performance
  • Chapter 3 Marketing and pricing
    • 3.1 An industry in transition
    • 3.2 Key drivers of the price of export wheat and its variability over time
    • 3.3 Growing and marketing wheat is a risky business
    • 3.4 Issues raised about marketing, pricing and managing risk
  • Chapter 4 Accreditation of exporters
    • 4.1 Eligibility criteria
    • 4.2 The application process
    • 4.3 Monitoring compliance with the Scheme
    • 4.4 Direct costs of accreditation
    • 4.5 Evaluating the arrangements as a whole — should accreditation continue?
    • 4.6 Evaluating the criteria, conditions and level of assessment of accreditation
  • Chapter 5 Access to port terminal facilities
    • 5.1 Background to port terminal access regulation
    • 5.2 The current arrangements
    • 5.3 The effectiveness and appropriateness of the WEMA access test
    • 5.4 Access to port terminals after the transition
    • 5.5 Regulatory requirements in addition to Part IIIA
    • 5.6 Auctions as a mechanism for allocating limited capacity
    • 5.7 Other issues
    • 5.8 Alternatives to the suggested future arrangements
  • Chapter 6 Transport, storage and handling
    • 6.1 How does the wheat supply chain operate?
    • 6.2 Recent developments in the wheat supply chain
    • 6.3 Access and competition in the supply chain
    • 6.4 Transport infrastructure
  • Chapter 7 Information provision
    • 7.1 Market information as an industry good
    • 7.2 Provision of market information
    • 7.3 Assessing the costs and benefits of information provision
    • 7.4 The case for provision of wheat market information
    • 7.5 Provision of industry goods and services
  • Chapter 8 Wheat quality standards and market segmentation
    • 8.1 What are wheat quality standards?
    • 8.2 Institutional arrangements
    • 8.3 Why are quality standards important?
    • 8.4 Issues in a deregulated environment
  • Chapter 9 Other industry good functions
    • 9.1 'Other' industry good functions
    • 9.2 Industry good functions under the single desk
    • 9.3 Industry good functions since deregulation
    • 9.4 An industry-led model
  • Appendix A Public consultation
  • Appendix B Marketing and risk management tools
  • Appendix C Australian and international experiences: accreditation and industry goods
  • References

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