Judith Adams (WA, Liberal Party) Share this | Hansard source

I rise this evening to speak on the Wheat Marketing Legislation Amendment Bill 2006. First, I would like to say that I am a Western Australian wheat grower and our family and partnership do not hold any shares in AWB. I think it is important for me to say that.

I concur with the remarks of Senator Murray. A lot of what I have to say he has already said. Western Australian farmers are in a dilemma. On the front page of the West Australian today it says, ‘West Australian farmers in limbo’.

I come now to the bill and what it will do. The Wheat Marketing Act 1989—the act—establishes the Wheat Export Authority and defines the arrangements for controlling export wheat from Australia. This Wheat Marketing Legislation Amendment Bill 2006 is required to enact temporary arrangements in the enabling legislation. The purpose of this bill is to amend the act through the transfer, on a temporary basis, of the right to veto bulk wheat export applications from AWB International Ltd—AWBI—to the Minister for Agriculture, Fisheries and Forestry. This transfer will be effective until 30 June 2007.

These changes do not amend the function or role of the Wheat Export Authority other than in the fact that it needs to seek the agreement of the minister for each application it receives. AWBI can still engage in export activities but no longer holds the right of veto. The reasons for these temporary changes are that the current system grants a monopoly to AWBI in the bulk export of wheat from Australia. Growers are compelled by law to consign their wheat to AWBI if it is to be sold internationally. In the present circumstances of drought caused low productivity, in my opinion this system is undermining growers’ profitability.

In Western Australia, some 95 per cent of the wheat produced is exported. This is also true of the vast majority of wheat produced in South Australia. This means that wheat growers in these two states are almost totally dependent upon the export market for their annual income. The dependence upon exports is not shared to anywhere near the same extent by wheat growers in other states, as most of that wheat is produced for the domestic market. Therefore, wheat growers in Western Australia and South Australia are left with no choice but to pay the fees extracted by AWB Ltd as the service agent for its fully owned subsidiary company, AWB International.

Whilst the Cole inquiry has brought significant media attention to the export wheat monopoly, I believe the system has been failing growers for many years. There is an inherent conflict of interest for AWBI between satisfying shareholders and maximising grower returns. This conflict, combined with excessive supply chain costs and marketing costs, particularly in low-production years, and an underinvestment in the industry, has led to a situation where wheat growers are at the bottom of the food chain in terms of receiving the true market value for their crops.

In addition, the Cole inquiry has revealed the significant contingent liabilities overhanging AWBI. With harvests well under way, Western Australian wheat growers are expected to deliver around five million tonnes of wheat from the current crop. That figure was released by ABARE this week. Because of the drought, this figure is well down on last year’s figure of 15 million tonnes. This year, Western Australia will supply almost all of the export wheat from Australia due to the drought in the eastern states. This, of course, also means that Western Australian wheat growers will be shouldering most of the cost burden if they are forced to deliver their wheat to AWBI.

Currently, Western Australian growers are consigning over 80 per cent of their wheat to grain marketers other than AWB or are warehousing their wheat. Normally around 80 per cent of wheat would go directly to AWBI, so it is plain to see that Western Australian wheat growers have voted with their wheat about what they believe to be the best option for their financial futures.

Leon Bradley of the Western Australian Pastoralists and Graziers Association was quoted in the Australian on 21 November 2006 as saying:

Normally farmers can’t wait to get their crop off and give it to the AWB, because they need the money to pay off their overdrafts, which reach a seasonal peak at this time of year.

He went on:

This year, even though they are under financial pressures, more than 70 per cent of farmers are refusing to deal with AWB, and we can understand it …

Growers must have a path to export their wheat other than through AWB before the end of the 2006-07 harvest, and this legislation provides it. I believe it is imperative that the legislation is enacted as a matter of urgency to allow greater competition in the marketing of export wheat.

If the restrictions that force growers to consign their export wheat to AWB pools are lifted, growers will be freed from the contingency risks impacting on AWB. It will also have the following advantages: there will be greater liquidity in the wheat industry, cash prices will be increased by opening the system to competition, competition will increase investment in agriculture and there will be better risk management opportunities as well as cost savings in the supply chain.

By amending the Wheat Marketing Act 1989 to remove the power of veto from AWBI and transferring it to the minister it is to be hoped other industry accredited wheat exporters will be able to seek licences to bid for growers’ wheat. This competition will allow greater freedom of choice for wheat growers to maximise the return on their crops. The proposed amendments do not prevent AWBI from continuing to provide exactly the same services to growers as they currently do.

In conclusion, I am somewhat concerned about the AWB service fee of $39.7 million and who will be responsible for it. I do not want to see Western Australian wheat growers being left to service this debt.