The peak farm lobby group for grain growers is calling for an inquiry into grain prices to explain why Australian farmers are getting up to $400 per tonne less for their product than farmers overseas.
GrainGrowers chairman Brett Hosking, said 15 years after a major shake-up of grain marketing in this country and the removal of the single desk for selling wheat it is time for a review.
"A lot of our ports are operated by just a handful of larger operators," he said.
"The growers feel like they've lost the connection between the grain they're growing and the market it's going to."
The Australian Competition and Consumer Commission (ACCC) has indicated its support for an inquiry, according to Mr Hosking, but it will need federal government support to proceed.
NSW Farmers vice president Xavier Martin, a grain grower from the Liverpool Plains, said the war in Ukraine and the ongoing North American drought have restricted grain supply globally, and as a result global prices have gone up, but Australian growers are not getting price equity.
"It's so far below what our fellow farmers around the world are being offered that it's causing a high rate of concern and dissent in our membership."
Is it abuse of market power?
Mr Martin said some farmers feel "it's abuse of market power" that is keeping prices low in Australia.
"They see futures prices and daily prices offered out of Vancouver for canola that are three to five hundred dollars a tonne higher than out of Australian ports."
Brett Hosking, the GrainGrowers chairman, wonders if the big traders are taking a big margin on that market.
"$400 is a big number … have the margins changed? Are they taking a bit more of a premium? Are they able to disguise that?"
Due to the limited number of companies controlling the ports Mr Hosking said there were limited pathways for growers to export their grain. He said he wants to ACCC to look at those sorts of examples.
Grains analyst Andrew Whitelaw from Thomas Elders Markets has another explanation for the gap between the Australian and Canadian canola price.
It is probably due, he said, to the Canadian crop being so small due to the terrible drought in that country.
"They are getting a premium because they are in dire straits, the same as we were in 2018."
Are local freight costs to blame?
Pat O'Shannessy, chief executive of Grain Trade Australia, the body that represents the big exporters, denies there is a lack of competition.
He thinks that lower Australia prices for grain are caused by freight costs and the challenge of dealing with a massive crop.
He said you can't compare pricing in the US and Canada.
"Local prices are about local factors."
Xavier Martin acknowledges that there are problems in the transport chain for grain that affect the price farmers are getting.
"It's road-only sites where farmers have delivered into sites and found they can't get the efficiency to outload onto trains, so pricing is nowhere near the same."
GrainGrowers are calling for the federal government to commit $1.5 billion to improve the first mile from the farm gate to the grain receival point and to the port.
More export capacity needed
Mr Whitelaw does see a problem with the futures market.
"We're still seeing hefty discounts for the coming-season crop, which at the moment we don't have any logistical problems for 2023, but we're still seeing $100/tonne discount compared to Chicago futures."
He doesn't think the discounted price can be justified, but he dismissed concerns about collusion between the big grain traders.
And he thinks there is enough transparency in the market.
"If a big player drops the price, you can see that on the screen and you can drop your price and follow, if that's what you want to do," he said.
Mr Whitelaw thinks the solution might be increasing capacity to export more grain.
"We're seeing 20–30 million-tonne [crops], and this year we may see another of 39 million tonnes, so maybe we need more export capacity."
Are traders manipulating the market?
The ACCC reports on bulk grain exports every year, something it began to do when the federal government removed the monopoly powers of the Australian Wheat Board (AWB) in 2008.
Australian growers used to supply all their grain to AWB which then marketed it around the world, but other countries complained about trade distorting practices and when AWB was embroiled in the oil for food controversy it signalled the end for the monopoly exporter.
The ACCC has been monitoring the sector to ensure there is some competition in the system.
The latest report showed a decline in the average number of exporters per port, while at the same time there is a growing number of new and smaller port facilities.
Two of the three major port terminal service providers, Viterra and GrainCorp, are beginning to lose market share to the growing number of the new bulk-grain port terminal facilities across Australia, while Cooperative Bulk Handling continues to dominate the grains market in Western Australia.
Growers worry about a few big players controlling the ports, but the ACCC said they received fewer complaints about port access in 2021.
