GRAIN Trade Australia has highlighted data showing the role three consecutive big cropping seasons have had in holding back prices below international parity.
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There has been a strong push from the grain production sector for an inquiry into the grains supply chain, which GrainGrowers claimed recently had caused a "significant anomaly" in pricing that needed investigation.
However, GTA has consistently resisted the push, saying that much of the reason Australian wheat cash prices were up to $150 a tonne below some international futures exchanges was a result of simple supply chain constraints rather than any wrongdoing by the grain trade.
GTA chief executive Pat O'Shannassy said demand for export capacity had simply outstripped supply.
"The sector has seen a situation where grain production and supply has exceeded the export supply chain capacity to move all the grain available for sale to the market within specific timeframes," he said.
The industry was reacting, he said, with new capacity coming online to meet exporter needs.
"In 2008, following deregulation of the wheat industry, there were 18 bulk grain export terminals operated by four companies," he said.
In 2023 there are 32 bulk grain export terminals operated by 18 companies, in addition to significant growth in the number of container packing facilities for export."
He said the grain export supply chain was moving more product than ever before.
"For the 2022-23 season, by the end of January 2023, we have already exported a record 15.8 million tonnes."
ABARES are forecasting a record 48.6m tonnes of all grain exports for the full 2022-23 season which is 13 per cent greater than the previous record set in 2021-22 and significantly above the 10-year average of 29m tonnes, which included the drought-impacted 2018-19 and 2019-20 seasons.
Mr O'Shannassy said the record volumes were creating record value.
"For 2022-23 ABARES (the Australian Bureau of Agricultural and Resource Economics and Sciences) are forecasting export value at $27.1 billion, which is 127pc above the 10-year average of $11.9 billion."
He said the problems and pressure points within the supply chain were already well understood.
"The supply chain operators have a clear understanding of the constraints which are concentrated around moving grain to export terminals, including labour, road and rail transport availability and infrastructure."
"We don't need an expensive inquiry to ask the supply chain participants what they already know but having a collaborative and united industry approach to engage with government to seek to improve the supply chain constraints would be useful for all."
Instead of an inquiry, Mr O'Shannassy nominated a whole of industry effort lobbying government for better access to labour and technology and road and rail investment.
In terms of export capacity, Mr O'Shannassy said it was important to understand the industry could not base its business case modelling around markedly above average years like the past three seasons.
"Just as growers need to prepare for drought years, the supply chain and capital markets need to juggle capacity for big seasons and bear the burden of having underutilised assets in average seasons."
"This underutilisation of assets during years of average and lower production and the cost of excess port and freight assets was highlighted in an independent report in 2020 by consulting firm LEK, commission by the Federal Department of Transport and Infrastructure as part of the National Freight and Supply Chain Strategy.
"The report notes Australia should consider the level of assets and levels of underutilisation over time.
"Since that report being released the grain sector has further increased the capital invested and the capacity within the supply chain."
Mr O'Shannassy said there was no sign of the market failure traditionally required to instigate an inquiry.
"In our view, the data and evidence show that rather than market failure, the grain industry has never been in better shape."
He said the grains sector was among the most overanalysed segments of agriculture already.
"Since the deregulation of the wheat single desk in 2008 there have been more than 30 inquiries, wheat port code and productivity reports held at both a state and federal level into the grain supply chain."
"These inquiries and investigations consistently find no evidence of market failure."
He said the local market was driving prices.
"Each local market is competitive, if a grain marketer or consumer has purchased grain, they require to execute their programs, it does not make sense to pay a higher price for additional grain they do not need."
"Just because a grower does not get the price they want or think they should get, is not an example of market failure.
"The market determines the price, and the market is local, the value of the grain is based on the price agreed between a willing buyer and seller."