First wheat, then barley, then sugar, now rice: de-regulation is sweeping through Australian farm industries, which have been run by monopolies for decades.
The government of New South Wales (NSW) state, where Australia's rice is grown, reluctantly passed legislation this week to de-regulate the domestic industry after the federal government threatened it with a penalty of A$26 million ($19 million), together with subsequent annual fines.
The de-regulation involves a domestic sales monopoly being broken up to allow new sellers to enter. An export monopoly is being left intact, although the domestic de-regulation is prospect of cracks in the export wall.
The industry does not want de-regulation and has been thrown into confusion. "We just don't at this stage have an idea of who else might want to get involved in the domestic market," Victoria Taylor, executive director of the Ricegrowers Association, told Reuters.
By Asian standards, Australia is a small producer but a big exporter of rice in a trade that mostly does not cross borders. Australia sells about 80 percent of its annual rice output of around 1 million tonnes, with exports worth around A$500 million.
This is about 25 percent of the world's quality medium grain rice trade, with Australia the seventh-largest rice exporter. For decades Australia's Rice Marketing Board has had power to compulsorily acquire rice, for domestic and export sale by its licensed monopoly, sunrise.
After de-regulation new sellers may enter the domestic market to acquire rice from growers, effectively leaving sunrise to compete for rice for exports.
New South Wales Primary Industries Minister Ian Macdonald warned this week that de-regulated domestic rice sales could find their way into exports, to drastically undercut export premiums.
The de-regulation could also blur arrangements by SunRice to acquire the rice for export, mainly to Japan, Southeast Asia, Papua New Guinea, the Pacific, Middle East and Europe, officials in Macdonald's office said.
The federal National Competition Council (NCC), the main body demanding the de-regulation of rice, is requiring that new arrangements start operating by July 2006, even though existing procurement contracts by SunRice run well past that date.
"Industry has always made it clear it would need at least four years notice if ever forced into domestic de-regulation," Macdonald said this week.
A SunRice spokeswoman told Reuters: "We are not at all comfortable for it to take place in the middle of next year". The rice shake-up closely mirrors events in the Queensland sugar industry, after the government of that state put a bill before parliament last week to end compulsory acquisition of sugar by monopoly exporter Queensland Sugar Ltd.
The sugar industry, which like rice mostly does not want de-regulation, is racing to write voluntary contracts between mills and Queensland Sugar so that it can continue to export.
The main crack in this is that two of 24 operating mills are refusing to join. Mills that decline to sell sugar to Queensland Sugar might export on their own behalf, or through foreign trading houses. Queensland's sugar bill was produced under pressure from the NCC, in similar fashion to the rice case in NSW. Australia's domestic wheat industry was deregulated in 1989, leaving the former Australian Wheat Board to acquire wheat for its export pools in competition with domestic sales.
This system has retained government support despite strong pressure from competing interests, led by the United States.
Comments
Comments are closed.