WHEAT EXPORT MARKETING BILL 2008

GS012/2008
04 June 2008

I rise to speak today in support of the Wheat Export Marketing Bills 2008.

As a Western Australia I am aware of the significance of this bill to the sustainability and the future of the WA wheatbelt.

This bill will introduce competition into the bulk wheat export industry. It's a bill that will support farming communities and farming families.

It's a bill that will create an opportunity for WA wheat growers to sell at better prices under better conditions.

Mr Speaker, we hear lots in this place about working families. There are farming families too. Our wheat farming families will benefit from these measures.

Mr Speaker, WA has a strong history of agricultural achievement in challenging conditions.

Colonists arrived in WA in 1829 and planted wheat they had brought from England.

European farmers recorded their first wheat harvest in WA in 1831.

Of course the wheat had been developed in English conditions and frequently failed to provide reliable and substantial crops.

The failure of these first crops was inevitable.

In isolated areas such as the Victoria District at Champion Bay - near Geraldton it was even known that starvation deaths followed crop failure. I quote from Sister Mary Albertus Bain:

"By the end of 1873 it could correctly be claimed that there had only been one good season since 1867. The most promising harvest since that date had that year been attacked again by red rust and almost the entire crop in the district was a failure...

...Malnutrition, worry and heat gradually took its toll in the district. The greatest number of deaths from 1870 to 1894 was amongst the children and the most common cause was 'marasmus' - inability to thrive due to a protein deficiency.'

Such was the skill of successive generations of farmers in the WA grainbelt that from failed first crops and starvation we have progressed to a sophisticated, science based, satellite guided, machine driven export industry.

The first mechanical harvesting was done with a reaper, heaps were forked into the thresher and then bagged by hand and shovel.

In 1911 a Northam farmer, James McManus, fitted storage tanks to his horse-drawn wagon and carted 11,000 bushels of wheat to the local flour mill - thus bulk handling was born.

The realisation that a cheap and efficient bulk handling system would reduce handling costs and the outlay of wheat bags was made effective through the establishment of Co-operative Bulk Handling, known by its acronym as CBH.

The Great Depression came, grain stocks piled up.

In 1933, CBH was registered by the Wheat Pool of WA and divided into 100,000 shares of one pound each. This effectively created the co-operative bulk handling system for grain growers.

During 1932 to 1933 CBH received 42,565 tonnes of wheat and only a year later the figure increased to 300,000 tonnes.

Grain sat in stockpiles again when World War II broke out. However, after the war, CBH's construction program continued in earnest and wheat marketing and stabilisation arrangements continued.

In 1948, the Commonwealth and States passed complementary wheat marketing legislation which established a statutory Australian Wheat Board with power to acquire all wheat produced in Australia; to market that wheat both within Australia and overseas; and to control the export marketing of wheat products. This legislation also provided guaranteed prices to growers.

WA had a significant advantage in logistics; storage, silos, rail and road logistics were in place. Grain points were operating at four key locations around the coast at Esperance, Albany, Kwinana and Geraldton.

The long and successful establishment of the farmer owned, monopoly grain handler, the CBH group, has made a significant contribution to the ability of WA growers to sell their product in an orderly and in a timely manner.

In 1998, CBH opened its Forrestfield terminal, the Metro Grain Centre, bringing total grain capacity across the state to 15 million tonnes... Today they sell grain by the container load.

From the 1920s to the 60s, there was significant improvement in Western Australian grain yields through the use of superphosphate fertiliser and identification and amelioration of trace element deficiencies such as zinc, copper and manganese.

The benefits were most dramatic on the sandy soils that dominate much of the WA grainbelt.

The WA grainbelt contains some of the driest, consistently farmed land in the world. Growing season rainfall is commonly less than 200mm per annum, 8 inches in the old scale, in the important period May to September.

Soils in the region are generally ancient, shallow and naturally infertile.

Taken together, these factors create a challenging farming environment, amongst the most difficult in the world.

WA agriculture prides itself on being science based. There can be no better example of science based agriculture any where in the world.

Combined with improved farm practise and the advent of wheat varieties better adapted to the Western Australian environment, yields continued to trend upward.

The 1970s saw the beginning of minium tillage, that is, seeding into uncultivated land especially when it had carried a crop in the previous year.

The introduction of lupins and increased use of legume based pastures to fix nitrogen again allowed yield improvements to occur.

In 1972, WA's CBH board made a bold decision to build a vast grain terminal at Kwinana, in my electorate of Brand.

The $42 million dollar loan was, at that time, one of the biggest raised in Australia and was deemed by more than one Australian bank to be beyond its means.

The project blew out to $72 million and eventually $80 million with the inclusion of a jetty.

CBH persevered and after the Kwinana terminal was opened it was an extraordinary success. It could store 912,000 tonnes of wheat and load ships at an unprecedented rate of 5000 tonnes per hour.

In the 1980's the eastern states grain industry battled problems with strikes and unhappy grower organisations resulting in a Royal Commission into grain storage, handling and transport.

WA's agricultural research and development system includes an emphasis on plant breeding and it is the case that the improving yield due to genetic improvement is currently higher in Australia than anywhere else in the world.

By national standards, WA is the leader.

But Mr Speaker, we should ensure we are not left behind in an ideological backwater while the world progresses with genetically advanced grain types.

Science, increasing efficiencies combined with good harvests have seen the grain industry propel itself into the twenty-first century.

From 2000 on WA has had a run of erratic seasons, with widespread drought and some severe localised frosts in spring downgrading quality.

The 2003-04 grain harvest however, heralded a record breaking 14.7 million tonnes.

On average WA's CBH Group receives, stores and handles up to 40 per cent of the nation's average annual grain production.

But WA is Australia's export state - we export minerals, ore, hydrocarbons and agricultural products like grain.

The WA wheatbelt not only supports WA's food needs but also creates an exportable surplus representing 90% of its total grain production.

Today, Western Australian grain is now exported to over 20 countries, with major shipments to Japan, South Korea, Indonesia, Iran, Pakistan and China.

In WA, as we speak, seeding is still underway with many farmers having a poor start to the season and considerable concern that this will not be a good year, despite good prices.

Farming has few certainties but one thing is for sure - farmers deserve to know how they will market their crop before they put it in, and understandably, want some certainty in what the marketing rules will be before the next harvest.

After 30 June this year, if this parliament does not change the current rules, the ministerial veto will disappear and the single desk that the National Party want to keep will vanish under the current law.

The law as it stands leaves us with the worst of all worlds and no one wants that to happen. So far after hours of debate, not one speaker has argued that we keep the current system.

The AWB supports this legislation, we know the Parliament will support this legislation, I know some farmers in my family support it too. Some do not, they are wary or opposed.

We need to create certainty.

There are those that say this legislation is the result of the AWB in Iraq and the consequences of the Cole Inquiry. I disagree but it's hard not to conclude a lack of transparency and insight in their Iraqi operations by AWB.

This past weekend saw the Rudd Labor Government fulfil another election commitment. That is, the withdrawal of combat troops from the operational duty in Iraq.

The removal of Saddam Hussein was only one aspect of the Iraq invasion which began over five years ago. The Rudd Government is committed to is the long-term rehabilitation and reconstruction of the Iraqi nation.

Central to the Iraqi story is the story of Western Australian farmer and businessman Trevor Flugge. Trevor was working on long term rehabilitation and reconstruction of Iraqi agriculture.

Mr Flugge is no stranger to politics or controversy.

Mr Flugge, once a candidate for the Nationals against the Member for O'Connor in 1987, at the time of Joh for Canberra, was a former chair of the Australian Wheat Board.

I take the view that Trevor Flugge made a great contribution to Iraq - to building agricultural capability at a time of need in a land of danger and death. In so many ways Trevor made a courageous contribution and I thank him for that.

We should acknowledge the good work he did. Separately I note the contemptible short comings of DFAT, BHP, Tigris and AWB.

I believe we are where we are with this bill because the commodity trading world in which we live demands it.

In the Productivity Commission's Submission to the National Competition Policy Review of the Wheat Marketing Act 1989, it was the commissions view that, and I quote:

"It is unlikely that the current wheat export marketing monopoly generates net benefits for Australia or, indeed, wheat producers themselves. The fundamental reasons for this assessment are that:

• the current lack of choice for wheat growers is likely to be impairing efficiency and innovation within the industry; and
• most if not all of the potential benefits of the AWB's single desk could be achieved under competitive selling arrangements"

This bill will remove the fundamental problem with the current arrangements that have created a restriction on participation in the export wheat market and subsequently, a lack of competition.

The Rudd Government is committed to addressing the problems associated with export wheat marketing arrangements.

Farmers are used to dealing with uncertainty whether it is their machinery, the supply chain, the weather or varying prices.

This government acknowledges that the new arrangements contained in this bill:

while market orientated;

while providing a new start for wheat marketing after Iraq;

will include an element of uncertainty as farmers learn to adapt to life in a competitive selling market.

I have noted some wariness in my own family.

Of course farmers already survive in a moving market with a range of market cost pressures such as:

• Labour costs and availability;
• Fertiliser costs that are heavily dependent on the price of gas;
• Diesel costs; and
• Exchange rate variability.

These often volatile forces make it difficult but necessary to sell in an open market, just as farm inputs are at prices set in open markets.

The Government acknowledges that risks and uncertainties are inherent in surviving in the global marketplace and we are committed to ensuring that support, where possible, is provided to farmers, especially in the transition period.

That is why the Government has announced new funding of almost $10 million over three years to assist with the transition to the new arrangements, including funding for:

• information sessions for growers and customers;
• collection and publication of market data;
• seed funding for Wheat Exports Australia; and
• technical market support grants for new exporters and assistance to the National Agricultural Commodities Marketing Association to develop an industry Code of Conduct.

This bill delivers on the Government's election commitment to give growers certainty more choice, minimise costs, boost innovation and efficiency and develop new export markets.

This bill establishes a new industry regulator, Wheat Exports Australia or WEA, with the responsibility to develop, administer and amend an accreditation scheme for bulk wheat exports.

WEA will only accredit companies that meet stringent 'probity and performance tests' and criteria such as the financial resources available to the company and its risk management systems must be taken into consideration.

WEA will also have the necessary investigative powers to perform regulatory, monitoring and enforcement responsibilities and WEA will have the ability to suspend or revoke accreditations.

The new arrangements will allow for any Australian registered company or cooperative to apply for accreditation.

The reforms effectively further deregulate the market and replace the single desk marketing arrangements that currently exist with the Australian Wheat Board.

This bill has undergone an extensive consultation process including the release of an exposure draft of the legislation, a Senate inquiry, the work of an independent Expert Group and private industry and grower briefings.

WA has come a long way since the days when early settlers suffered starvation at Champion Bay. Today we feed not only ourselves but the rest of the world.

Today it is West Australian farmers who are champions.

This bill will see the WA wheatbelt continue to be a world leader in innovation and ensure that the industry can adapt to the changing global wheat market.

Mr Speaker in conclusion I would like to acknowledge the hard work done by Senator Kerry O'Brien to deliver this outcome. During the 2007 election campaign, while visiting my electorate and the Kwinana grain terminal, Senator O'Brien forecasted this change.

Today we deliver.

Thank you Kerry.

I commend the bill to the house.