Peak bodies GrainGrowers, the National Farmers’ Federation and NSW Farmers have lobbied the government to investigate higher than usual discounts for the 2021-22 season despite high global prices and a constrained supply due to the Ukrainian war.
A government spokesperson said the Federal Government was committed to engaging with the grains industry on issues of the market’s transparency.
“We are aware of concerns raised by grain grower representative bodies about competition within the Australian grains supply chain,” the spokesperson said.
“However, there are a range of views in the industry as to the merits of such an inquiry.
“We will continue to consult widely on this issue.”
Holbrook farmer Stewart Hulme said the basis of sales was influenced by the war in Ukraine but last year’s bumper crop should not have been as affected.
“Someone’s picking up the money. It’s usually the traders,” Mr Hulme said.
“The market has been up and down and crazy all over the place, but farmers tend to be focused on the here-and-now and so don’t get caught up in what happens after.”
Mr Hulme typically chooses not to sell his crop at harvest, electing to sell throughout the six months afterwards.
“Experience tells me that if you price it out over six months, you can improve your bottom line,” he said.
Wimmera grain farmer David Matthews said dependence on the oligopoly controlling grain exports needed reviewing.
“The several companies that determine prices are typical of most Australian commodities markets, but I am beginning to question if the oligopoly is affecting not only farmers but the Australian economy overall,” Mr Matthews said.
“It seems as if there’s a structural disincentive that reduces the volume of crops.
“And in this industry, profit is driven by volume and not price.
“The oligopoly does not favour either consumers or the farmers.”
Mr Matthews also supports the strategy of withholding crops for sale after harvest.
“We have certainly headed into that strategy and try to hold most of our crop.
“There are plenty of other farmers who do not sell at harvest time and have much better outcomes.
“But those who do sell at harvest do so for a cash flow reason.”
Mr Matthews said banks could have a role to play in such decisions.
“Farmers need to pay bills at harvest but would like to hold their crops, so they need to separate a market decision from a cash flow decision.
“Are the banks comfortable to lend against a stored grain crop?
“That’s the bit of the jigsaw puzzle needed: for banks to trust a crop in storage and provide an interim cash flow for farmers.”
Mr Matthews said farmers also needed to develop a better understanding of how the grain market operated to improve their profit.
“Farmers should not only lobby the government but also try to get better at their business,” he said.
“We can shift the dial if farmers had a better collective understanding of how the market works.
“We need to know the value of grain at the destination market and work backwards from that.
“Farmers can then learn to exercise influence through understanding the trade.
“But we need more transparency so there is a deeper understanding.”
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