Grain Prices

Innovative marketing best way to manage low grain prices

Grain Central, March 8, 2018

INDUSTRY-LED innovation in marketing is the key to managing lower grain prices over the five years to 2022-23, according to ABARES’ senior adviser for industry policy, Dr Rohan Nelson.

Speaking at the Outlook 2018 conference this week, Dr Nelson said low prices inevitably prompted calls for government intervention in grain marketing.

“Low prices are not necessarily a sign that grain markets are broken,” he said.

“The forecasted price reduction is due to expanding world production capacity—intervention cannot influence world prices, and comes with administrative costs and regulatory burdens.”

Grain grower John Snooke from Cunderdin in Western Australia told the audience that many government interventions in grain markets haven’t delivered the outcomes growers wanted, leading—ironically—to calls for more intervention.

“Markets don’t need to be perfect. Since deregulation growers have many choices when it comes to marketing,” Mr Snooke said.

Chris Kelly, from family owned business KM & WM Kelly & Sons, southern NSW, said that when it came to grain trading, scale wasn’t everything.

“Thanks to freer markets and technology, Kellys are able to compete efficiently against companies multiple times the size of us. Improvements in communications have provided transparency to all participants—buyers, traders, brokers and farmers.”

According to Tim Krause from southern grain handler, Viterra, an efficient grain supply chain has to meet the needs of growers, exporters, domestic and end-user customers to provide value back to growers.

“The reputation of Australian grain has been established through a lot of hard work over the past 30 to 50 years. We must maintain the integrity in our supply chains to guarantee we retain the standards that have been hard fought and won,” Mr Krause said.

Source: ABARES

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