Speaking at the Outlook 2018 conference, ABARES’ Senior Adviser for Industry Policy, Dr Rohan 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.”
Chris Kelly, from family owned business KM & WM Kelly & Sons said that when it comes to grain trading, scale is not everything. “Thanks to freer markets and technology, Kelly’s 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 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.”