Australia's wheat export industry is still struggling from having too few grain handlers, reducing options for smaller buyers to transport wheat, said Alan Winney, chairman of one of Australia's top grain traders, Emerald Group.
The marketing system for what is typically the world's fourth largest wheat exporter, put in place three years ago, was designed to improve farm-gate prices while keeping Australian wheat internationally competitive.
A government inquiry into the performance of the new system that winds up in early November is likely to recommend more transparency about how export deals are struck and how to improve the infrastructure needed to deliver grain to waiting ships, said Winney.
"Parts of the system are still struggling...access to rail is very difficult and you've got shipping arrangements that are still in their teething stage post deregulation," Winney told Reuters in an interview. Australia is a leading wheat exporter, competing for business with other major suppliers in North America, Western Europe and the Black Sea such as Russia. The country's wheat harvest gathers pace in November. Crop forecasters expect around 24.5 million tonnes to be reaped, compared with an average 18.5 million tonnes in the year that ended on September 30, 2010 but down from last year.
Winney said a lack of rail transport meant the industry was relying more heavily on expensive road transport. Australian listed Grain Corp Ltd dominates grain handling in eastern Australia and controls most of the east coast grain export terminals.
Canada's Viterra Inc is the key grain handler and port operator in South Australia and farming co-operative CBH Group dominates grain handing in Western Australia. "When you only have a limited number of companies owning the handling and port facilities, then the rest of us are not really getting fair access to shipping," Winney said.
"I think the (new) system has created more competition at the farm gate but possibly not in the export market." Emerald is 50 percent owned by Japan's Sumitomo Group.
"The handlers and storers are in a stronger position but the ACCC (Australian Competition and Consumer Commission) is quite rightly keeping a strong eye on what they are up to as these firms also have their own marketing groups," said Winney. Winney said there were still hurdles to overcome. "We're not getting fair access to infrastructure. For example, Viterra booked up all their shipping slots before anyone else could bid," said Winney.
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