Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Agriculture, Fisheries and Forestry. Will the minister update the House on the predictions for this year’s wheat crop?

Mr Tony Burke (Watson, Australian Labor Party, Minister for Agriculture, Fisheries and Forestry) Share this | Link to this | Hansard source

I thank the member for Wakefield for his question. I note his strong engagement with the wheat growers in his electorate of Wakefield and their support of the need to reform wheat marketing. More information on the future of this year’s wheat crop was made clear at 10 am today with the release of the ABARE Australian crop report. The area sown to wheat is forecast to be a record 14 million hectares for this year 2008-09. The forecast crop is still only a prediction—and, given that we had a bad season in May, it is still being revised and the most recent revision is slightly downwards. The current forecast is for 23.7 million tonnes, a significant increase on last year’s harvest of 13 million tonnes.

Looking at the future of this year’s wheat crop, the most important part of that future—along with the total tonnage—is under what system it will be sold. The new system will, for the first time, allow growers a choice: if they wish to sell through a pooling arrangement then they can do so and if they wish to sell through a different mechanism then they can also do so. Providing this sort of choice for this year’s wheat crop is an important part of the future of the crop. Many people have said that these options for the future have only come out of the wheat for weapons scandal, but the warnings actually came much earlier than that. In the year 2000 the Productivity Commission concluded that the benefits of single desk marketing, be it for wheat, sugar, barley or rice, could be achieved without a monopoly buyer or seller. I will quote the Productivity Commission report of 2000:

... producers can benefit from the increased range of services provided in a more competitive environment.

The national competition policy review, also in the year 2000, eight years ago, concluded that a single-desk operator is less responsive to both its clients and its suppliers. In eight years the warnings have not changed; what has changed is that we no longer have a government willing to neglect and fail to act on difficult economic reforms. The monopoly did let down wheat growers. This is not only about the $300 million in bribes paid to Saddam Hussein. If you look at the 2006 growers report from the Export Wheat Commission, you will see that it found that those who did not export through AWBI were getting higher prices than the AWBI in the container market and that delays in executing a contract for the sale of wheat to India cost growers $9.5 million. This pain to growers under the single desk system will not be part of this year’s wheat crop.

The 2007 growers report looked at chartering arrangements and found that, for 39 vessel charters, the national pool was $14½ million worse off for growers than it would have been if prevailing commercial shipping rates had been used. I have directed the Export Wheat Commission to investigate this issue and I am awaiting their report. The 2007 growers report addendum, released only yesterday, concluded that AWB Ltd’s hedging strategies were speculative and placed unacceptable risks in the 2005-06 and 2006-07 national pools. Given that the monopoly has, year after year, let growers down, it is important that, as we wait for the Senate debate on this issue, we also reflect on the response of the Leader of the National Party when I allowed an extra permit through earlier in the year for Glencore to also be allowed to export wheat. What happened there? For the first time in some years, Australian wheat growers were allowed back into the Iraqi market—a benefit again for wheat growers. These are difficult economic reforms. These are challenges that have been put to the previous government dating all the way back to 2000. They are challenges that this parliament and this government are happy to take on. All the evidence points to growers being the beneficiaries of the changes.