Washington, DC
November 29, 2007
Source:
U.S. Wheat Associates
The world wheat market is a lot
closer to fair and open competition after Australia’s Labor
Party, led by Kevin Rudd, defeated Prime Minister John Howard’s
Liberal Party in parliamentary elections on November 24.
Labor promised to end more than 60 years of wheat export
monopoly control in the wake of a wheat trading scandal
involving the export State Trading Enterprise AWB International
that, in Labor’s words, “exposed the failures of the current
export marketing arrangements.”
According to an “Australian Wheat Export Marketing” policy
document released in October, Labor proposes a new model which
“increases choice to growers by offering a number of selling
options. Rather than forcing growers to sell their export wheat
through a monopoly exporter as is currently the case, under
Labor’s plan there will be a single desk with multiple
accredited exporters.”
The U.S. wheat industry believes export State Trading
Enterprises like AWB and the Canadian Wheat Board (CWB)
inherently distort world wheat trade and has been working at the
direction of producer leaders to remove these free trade
barriers. AWB and CWB can and do use their monopoly power to set
different prices than an open market would have otherwise
dictated for different markets, often using U.S. wheat prices as
a benchmark. That ability artificially affects the true value of
wheat sometimes at the expense of buyers and usually at the
expense of wheat producers.
“Competition works for wheat buyers and producers,” says USW
President Alan Tracy. “Assuming Australia’s new government
fulfills its promise, this change will definitely improve the
way the world wheat market functions.”
Tracy has often repeated a key point that the U.S. wheat
industry has never had an issue with Australian or Canadian
growers. In spite of the fact that the U.S. competes
head-to-head in wheat export markets, he says the issue has
always been with the trade distorting power of the export
monopoly.
“Australian farmers are a competent lot,” he says. “We know
change doesn’t come easily, but we believe Australian and, we
hope, Canadian growers will eventually welcome the freedom to
sell their grain whenever and to whomever they choose.”
To learn more about recent steps in the journey to truly open
wheat marketing, visit the USW Web site at
www.uswheat.org and click
on “Wheat Letter” to access these back issues of Wheat Letter:
Nov. 30, 2006; Dec. 28, 2006; April 5, 2007; April 19, 2007; May
3, 2007; July 27, 2007; Oct. 4, 2007.
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