Lessons suggested from Aussie experience

Australia and Canada don’t share the same experiences in their efforts to eliminate single desk grain marketing, says an Australian grain industry leader.

“It would be simplistic at best to compare the two situations completely,” Geoff Honey told a Canadian grain symposium in Ottawa Nov. 22.

However, he said there are lessons to be learned.

The Australian Wheat Board lost its monopoly and government backing in 2008 after more than a decade of debate and a scandal involving sales to Iraq.

The final changes to complete the process will happen in the next several years, but the export market is now open, said Honey, chief executive officer of Grain Trade Australia.

In its place, industry has made arrangements for exports, grading and grain collection.

The single desk has been replaced by 25 accredited exporters and Honey said the industry is thriving with record production and exports last year and strong profits throughout the chain.

In an interview, Honey said the Canadian and Australian plans are not entirely comparable because the Australian government and its competition laws make certain that all grain exporters, including AWB Ltd., have access to all existing port storage facilities.

And at its demise, the AWB owned some system assets, unlike the CWB.

However, he said there’s much for Canada to learn from the Australian experience.

“Commercial forces stepped up and while it wasn’t 100 percent, it was largely successful,” he said. “In the Australian experience, access to storage and port facility for all was critical.”

Foreign grain companies, including Canada’s Viterra, have invested in the Australian system in recent years, and there has been an “incredible amalgamation of ownership.”

Critics have cited the Australian example during debate over the Canadian government decision to end the CWB monopoly, saying farmers have lost control, multinationals have taken over and farmer returns have fallen.

Honey said the evidence is that with more competition for grain, farmer returns have increased, as has acreage.

However, in his speech, he conceded that the Australian government moved too quickly to abandon a public role in determining grades and varieties, leaving it to industry specifications to determine what grain is grown for the system.

He said the government will backtrack a bit on that.

Honey had some advice for farmers who oppose loss of the marketing monopoly: they do themselves no favours by boycotting the process of designing the new system.

In Australia, farmers in New South Wales and Western Australia states who grew mainly for export and supported the AWB monopoly opposed the government plan.

“As far as the farmers were concerned, they would fight it to the death,” he said. “And they did.”

Without farmers at the table to argue for the industry, the government moved forward and offered just $9.37 million over three years in transition funding.

By contrast, sugar and dairy farmers received hundreds of millions of dollars in transition money when they lost their regulated system.

“The government got off incredibly lightly in paying for grain deregulation because the producers weren’t there to make the case for a better deal,” he said.

“I would say the industry has just moved on and those farmers who fought it have no choice but to adapt, and they will,” he said.

“It is evolving but I would say there is an understanding that for the system to succeed, everybody has to do well and I think that’s what’s happening.”

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