Letter: Barley story wrongby Russell Savage MLANews Weekly
, July 14, 2001
I would welcome the opportunity to provide some facts about the Victorian Government decision to implement the Coalition legislation to deregulate the export barley market.
This might assist your readers to make a judgement about Pat Byrne's analysis of the issue (News Weekly,
The Australian Barley Board argued its monopoly generated a $15 million economic benefit, of which $11 million came from feed barley exports to Japan.
However, Victoria is fundamentally different from the other states. Sixty per cent of Victorian barley is sold into a deregulated domestic market and nobody, including the National Party, has argued it should be re-regulated.
The bulk of the 40 per cent exported is malt, not feed. The Government's consultant concluded that "on average Victorian feed barley accounts for only three to four per cent of all ABB Grain Export Ltd feed barley exports".
I understand Victoria exports around 350,000 tonnes of the 650,000 tonnes of malt barley grown here every year. Of that, forward estimates suggest the deregulated container trade, to which the VFF, ABB and the Coalition were opposed only a few years ago, could account for 60,000-80,000 tonnes
I gather half a dozen new traders have developed this market.
The main market for malt barley is China, and I believe that, until recently, the ABB has been selling predominantly to China National Cereals Oils and Foodstuffs Corp (COFCO) and China Resources Group. China de-regulated barley imports in 1996, but COFCO, the previous monopoly, has been able to maintain its dominant position because China has imposed a 35 per cent tariff on processed malt.
However, the Chinese maltsters are campaigning to remove this tariff and, I am told, are likely to be successful before 2004. The maltsters will then be able to buy processed malt, in which the world trade is greater than it is for malt barley, from the USA and Europe.
The consequence of the ABB simply taking barley off the farm, tipping it in a ship and selling it is that the board does not have processing facilities or cleaning or grading facilities, and only limited barley segregation. These deficiencies and a loss of market share by COFCO and China Resources Group could prove costly.
Calling the barley board a "single desk" is misleading. ABB Grain Export Ltd is a private company (the largest shareholder being a foreign company) that seeks the benefit of a government-conferred monopoly for Victoria and South Australia. This monopoly competes with a similar Western Australian monopoly and a New South Wales monopoly.
The ABB is not the Australian Wheat Board. The fact that the ABB is a private company, and not a statutory marketing authority, raises the issue of whether the Government should do another Citylink and confer a monopoly on a private company.
On the issue of the VFF poll, 4300 ballot papers were distributed, but some farmers received more than one vote. A family trust, for example, claimed 14 votes. Presumably growers in NSW and South Australia who sold to the ABB (of whom there could be up to 1000) also could have voted.
Ignoring issues such as whether farmers who grow barley on a rotational basis should be treated equally with those who grow it every year, whether those who grow limited amounts should be treated equally with those who grow thousands of tonnes, and whether those who grow feed ought to be treated equally with those who export malt, there is another issue.
Liberal agriculture spokesman Steve McArthur told Parliament there were 8000 barley growers. Consequently, barely 50 per cent of Victorian growers, at best, received a vote.
Of the 4300 ballot papers, 2330 (less than a third of growers) supported the ABB "single desk".
The ABB also said its poll showed 84 per cent for the "single desk". However, in the same poll, of growers who sold to the ABB, only 39 per cent of Mallee respondents thought the ABB got them the best price for their export grain; 61 per cent worried about whether the ABB really got farmers the best price; and only 37 per cent thought a "single desk" export facility meant the industry was more efficient.
Mr Feeney argues quality will decline. I understand 20 million tonnes of cheap, feed grade barley are traded globally every year and if buyers want low quality grain, there is plenty available. Victorian malt is in demand because of its quality, not in spite of it.
Further, I note your reference to co-operatives. May I say that co-operatives such as Rupnorth support the removal of the ABB monopoly.
Finally, when I supported the de-regulation of the export container trade, at the urging of co-operatives and growers, I was vilified by the VFF, the ABB and the Coalition.
This deregulation has not only benefited co-operatives, but also enabled the development of niche markets to which I have referred. Russell Savage MLA,