Quattro’s grain terminal at Port Kembla, one of the four Australian port zones where grain pricing has been investigated by GrainGrowers. Photo: Quattro Ports

ANALYSIS by GrainGrowers says prices paid for Australian wheat in 2021-22 were considerably lower than those paid for other origins, and has asked for the Federal Government to launch an inquiry or review into the matter.

Support from the National Farmers Federation and the NSW Farmers Association has added weight to the GrainGrowers’ call for the launch of an investigation into the grain and oilseed industry and supply chain.

All three organisations have this week put out statements saying growers could have lost “billions of dollars”, and called for an Australian Competition and Consumer Commission inquiry.

GrainGrowers has suggested a Department of Agriculture and Fisheries or independent review, or a Senate inquiry, as alternatives to an ACCC investigation.

Claims of $2.6B wheat loss

The research paper was prepared internally by GrainGrowers, and was presented to the Federal Government late last year.

“Our research highlighted enormous anomalies accepted by grain and oilseed growers in the winter-cropping cycle for 2021-22,” GrainGrowers chief executive officer Shona Gawel said.

“At face value, in wheat alone, the value loss to grain growers is approximately $2.6 billion.”

GrainGrowers has at this stage chosen not to publicise how it calculated the $2.6B figure, other than that it involves the average basis anomaly.

“Growers have been raising the issue for some time, and the report provides quantitative evidence supporting the need for government to perform an in-depth investigation.”

“Given the issue’s importance, we believe it is appropriate for the government to decide and commence what it considers to be the most appropriate course of action to address the identified concerns.”

GrainGrowers CEO Shona Gawel.

Ms Gawel said unless the drivers behind these anomalies were better understood and addressed, they would continue to adversely impact growers and the wider industry.

“To get to the heart of the matter, we believe any investigation should include the end-to-end grains supply chain nationally, originating at farm gate through to export and domestic channels.”

“The investigation is not a finger-pointing exercise at any individual market participants, but rather a much-needed review in the interest of all players in the value chain.”

“A thorough investigation will reveal if there are any supply chain bottlenecks and other barriers for trade participants.”

GrainGrowers’ research looked at the Geelong, Kwinana, Port Adelaide port zones, and price relativities to three US wheat contracts plus Europe’s MATIF.

The organisation’s analysis showed an A$65/t discount in the Port Kembla zone for the benchmark APW1 grade to comparable grades from Europe and the US.

Price differences between Chicago and Kwinana wheat. Source: GrainGrowers

NSW Farmers grain committee chair Justin Everitt said the government could compel an ACCC inquiry using Section 95 powers, which would provide essential recommendations for reform, and address grower concerns about the under-pricing of Australian grain.

“There are market failures occurring across the supply chain due to a lack of competition, and there is the real possibility of monopolistic behaviour because of bottlenecks in the system,” Mr Everitt said.

“We’re out there in the paddock trying to grow food for Australia and the world, but then we’re forced to take lower prices because we don’t have the supply chains or markets that would allow real competition.

“NSW Farmers has written to the Treasurer and the Agriculture Minister and so far – no response – but we’re hopeful more attention on the issue will spur them into action.”

“Failure to act on this important issue will see our economy continue to bleed billions of dollars when we can least afford it, we need immediate action.”

Following the GrainGrowers report, NFF chief executive officer Tony Mahar said the Federal

NFF CEO Tony Mahar.

Government needed to respond immediately by instigating an inquiry through the ACCC or similar.

“These are mind boggling losses that could run into the billions for wheat alone,” he said.

“At a time of increasing market concentration across agricultural supply chains, Australian farmers need certainty that no one is using this market power to increase profit at the expense of family farms.

“Given the impact this could have on farmers and the supply chain, nothing short of an in-depth investigation will do.”

Source: GrainGrowers, NSW Farmers, NFF