FARM WEEKLY article by GREGOR HEARD
11 Jun, 2016 02:00 AM
NZX Agribusiness head Ron Storey says more stocks information reporting could benefit the industry.
The Federal election has seen grower groups move wheat stocks information provisions back into the spotlight.
Grain Producers Australia (GPA) has called on the new government to enforce provisions passed in the 2012 Wheat Export Marketing Amendment Bill regarding minimum levels stocks information disclosure, saying opaque stocks information cost growers money.
Andrew Weidemann, chairman of GPA said growers wanted more in the way of wheat stocks reporting.
Bulk handlers have pushed against having to release more stocks information, saying it is commercially privileged, but Mr Weidemann said they were only playing a service in storing the grain, not owners of the grain and should be compelled to give out a certain level of information.
He said he was frustrated to see neither side of politics act on the recommendations of reports to push for mandatory levels of stocks reporting from the major bulk handlers.
The three major bulk handlers issue their own stocks reports periodically, but attempts to get an industry wide voluntary reporting project up have so far failed.
Last year, the Grains Research and Development Corporation (GRDC) appointed the Australian Export Grains Innovation Centre (AEGIC) to prepare a report into stocks reporting.
AEGIC in turn enlisted the help of grains industry veteran Ron Storey to put together the report.
Mr Storey said he went to the bulk handlers asking them to provide stocks in an aggregated form as a trial of a potential ongoing system and could not get an agreement from all of them to participate, so he went back to AEGIC recommending the report did not go ahead.
“Without the bulk handlers, the numbers we gathered would be flawed,” he said.
Former GPA chairman Pete Mailler, now the leader of the fledgling Country Minded political party said the lack of action had cost the grain production sector $300 million since the Coalition took charge of government.
This number was based on a figure of $3-5 a tonne in value for stocks information, an estimate he said was conservatively and independently calculated.
“This stocks information, in the form of stocks by port zone, weekly at harvest time and monthly afterwards, would have helped address some of the asymmetry that exists in the grain marketing system in favour of bulk handling companies,” Mr Mailler said.
Mr Storey said from his perspective if there were to be more stocks information released, it needed to be across all the major crops.
“The data from just wheat is not as useful without similar data for barley and sorghum if you are working in the feed grain complex,” he said.
He said he felt there was merit in having more information available to all.
“The initial report unequivocally stated there was asymmetric market information at present, and it would be good to try and make that a more even playing field.”
He said he thought the proposed monthly reporting system at a port zone level would work.
“We’re not going to have a US-style system, with its massive costs, but a simple reporting program would be of use.”
The wider grains industry has differing views on the matter.
Grain broker Brad Knight, GeoCommodities, said more detailed stocks reporting had advantages for the industry, but added it would need to be more than just the bulk handlers participating.
“In Western Australia, perhaps, where there is not so much grain stored on-farm, a bulk handler only system could work, but on the east coast, there is too much grain in on-farm storage for it to work well without some provision for calculating stocks held on-farm.”
Grain Trade Australia chairman Peter Reading said his organisation did not have a set position on the issue.
“We have divergent positions amongst our members, so we don’t have a formal policy position on stocks information,” he said.
The Australian Grain Exporters Association (AGEA) on the other hand, in previous submissions on the matter, is firmly in favour of more stocks information being released, saying transparent stocks information will aid the industry to function more efficiently.
The bulk handlers spoke against any move for further release of stocks information.
“Can the proponents of providing more stocks information clearly state what the “problem” is they are trying to solve?” asked GrainCorp corporate affairs manager Angus Trigg.
“So far, no one can point to the issue – there is a huge amount of information already available and there are understandable concerns about providing any more.”
A Viterra spokesperson said the company already provides significant detail about the stock within its system.
“We believe that the current level of stocks information strikes the right balance for all stakeholders,” they said.