Deregulation provides dollar benefit to WA farmers BY LAURA LUDGATE 5/03/2009 4:00:00 AM
GRAIN deregulation was the right thing for the Australian export wheat market, according to a leading grains industry analyst.
Addressing last week's Pastoralists and Graziers Association (PGA) convention, ProFarmer Australia managing director Richard Koch said freeing up the system clearly benefited WA farmers.
However Mr Koch admitted not everything had been smooth sailing.
"Our biggest challenge to date is the management of the supply chain," Mr Koch said.
"We have got it about 60 to 70 per cent right but you only have to take a walk along Cottesloe beach and look at all the boats that are waiting to realise that something has gone seriously wrong.
"I think there are at least 10 or 12 boats and I have not seen that in my time involved in the grains industry.
"Grains Express has not been flexible enough to handle the surge in demand and overseas shipping spots."
Mr Koch said CBH needed to learn from this because there was now a system which demanded continuous improvement and if it was not delivering what the market needed, the market would find it somewhere else.
Mr Koch said going back to the start of deregulation, "nothing really happened" in the first couple of months until the credit crisis came in and grain prices started to fall.
"Some of the players were struggling to obtain finance," he said.
"We were thinking is this as good as it is going to get?
"By August 26, WA prices had moved to a premium to east coast prices and I had never seen that before.
"That is what we thought might happen and that's what we were expecting but I didn't think it would happen so quickly which showed how distorted the market was."
Mr Koch said APW prices have been sitting relative to international prices despite the deregulation.
"While there is no sign that deregulation has worked, the fact that our position in terms of international wheat has not changed is a victory in itself," he said.
