Program 1.7: Grains industry
The objectives of this program are to:
- assist primary producers to develop a more competitive, internationally focused and self-reliant grain industry
- maintain appropriate industry regulatory functions and statutory funding for research and development.
Review of performance
This review addresses the deliverables identified in the 2011–12 Portfolio Budget Statements. Table 8 summarises the extent to which we have met key performance indicators.
Improving wheat export marketing
The transition to a fully deregulated bulk wheat export market began on 1 July 2008 with the abolition of the single-desk wheat marketing arrangements. The Wheat Export Marketing Act 2008 established a system for regulating the export of bulk wheat, where exporters must be accredited under the Wheat Export Accreditation Scheme. We are now working towards removal of the accreditation scheme, in accordance with the Productivity Commission's recommendations (see below). This will build on the success of the 2008 reforms by further increasing competition, providing greater choice for growers and reducing costs.
The 2010–11 marketing year (October to September) was an exceptional year for bulk wheat exports. Of the record 27.9 million tonnes of wheat produced, 16.3 million tonnes were exported in bulk to 36 countries. Another 2.2 million tonnes were exported in bags and containers. Exports were strong in the first nine months of the 2011–12 marketing year, with 15.8 million tonnes of wheat exported, including 1.8 million tonnes in bags and containers.
Response to Productivity Commission review
In 2010–11, the Productivity Commission's report on its inquiry into wheat export marketing arrangements was tabled. Key recommendations were to abolish the Wheat Export Accreditation Scheme, Wheat Exports Australia (WEA) and the Wheat Export Charge on 30 September 2011. The commission recommended access test requirements for grain port terminal operators be removed on 30 September 2014.
The government announced its response to the Productivity Commission's recommendations on 23 September 2011. The government agreed in principle with the recommendations and believes a three-stage approach to implement the recommendations will provide a more effective transition to full market deregulation and help ensure that the advantages of the 2008 reforms are realised.
The first stage was the introduction of a 'lighter touch' accreditation scheme that will continue to operate within the existing legislation until 30 September 2012. WEA removed non-essential, non-mandatory conditions of accreditation, such as the need to supply annual export proposals, moved to a targeted audit schedule based on risk and adjusted its Corporate Plan. The 'lighter touch' scheme reduces the level of red tape for exporters and the associated costs of export accreditation, while still meeting the needs of growers by maintaining fit-and-proper criteria and retaining the link with the access test.
The Wheat Export Marketing Amendment Bill 2012 was introduced into parliament in March 2012. This legislation will implement the second stage, under which the accreditation scheme and the Wheat Export Charge will be abolished on 30 September 2012, with WEA to be wound up by 31 December 2012. The requirement for providers of grain port terminal services to pass the access test as a condition for exporting bulk wheat will be retained until 30 September 2014. The access test will then be abolished, on the condition that a voluntary industry code of conduct that covers access to grain export terminals has been approved by the minister and is operational.
The third and final stage will operate from 1 October 2014, when the market will be fully deregulated. Access issues will be governed by general competition law administered by the Australian Competition and Consumer Commission, complemented by the voluntary code of conduct covering port access.
Deregulation will bring the bulk wheat export market into line with other agricultural commodity markets. It will promote further competition in the wheat industry, leading to increased productivity and profitability. Deregulation is expected to drive further marketing innovation and improve the services that marketers provide to secure supplies of wheat. The industry will also benefit from the removal of the costs associated with regulation.
Development of a voluntary code of conduct
The industry has convened a Code Development Committee under the leadership of Grain Trade Australia to develop the voluntary code of conduct. The committee consists of representatives from port terminal service operators/bulk handlers, grower organisations and the Australian Grain Exporters Association. We attend meetings of the committee as an observer. If the minister does not approve a code, then the access test arrangements will continue after 30 September 2014.
Wheat market information study
To balance competing claims about marketing information needs and help industry indentify a long-term solution in a deregulated environment, we commissioned an independent analysis of the information requirements for an effective bulk wheat export market.
The analysis used information obtained via a desktop audit of existing reports and discussions with key industry representatives across the supply chain. All sectors of industry were consulted directly in the development of the report.
Wheat Export Technical Market Support Grants
In December 2011, the final projects funded under this program were completed. The program aimed to improve the capacity and export potential of new and smaller scale exporters and encourage a stronger understanding of technical requirements to enhance export opportunities and competitiveness.
The projects funded targeted niche marketing opportunities in new and existing markets using a range of strategies, including quality assurance and technical and relationship building visits to and from potential customers.
A total of $316 334 was spent on 19 projects under the three rounds of the program.
'Windrowing at dawn'—the winning image in the Our Infrastructure category of the 2012 DAFF Photo Competition
Taken by Amy Fay.
Supporting research and development
Grains Research and Development Corporation
The Grains Research and Development Corporation (GRDC) is the statutory research and development corporation established in 1990. GRDC plays a leading role in planning, investing in and managing R&D for the Australian grains industry; and facilitating the dissemination, adoption and commercialisation of the results throughout the industry. We work with GRDC to ensure it meets its legislative requirements, including facilitating the minister's approval of GRDC's 2012–17 Research and Development Plan, commencing 1 July 2012. GRDC met its obligations in 2011–12.
Key performance indicators
|Key performance indicator||2011–12 target||Achievement|
|Government's obligations in respect of the operation of the wheat export marketing arrangements and delivery of associated initiatives are fully met||100%||Met||Met||Met|
|Performance: The government response to the Productivity Commission's inquiry was announced and is in the process of being implemented. Final projects under the Wheat Export Technical Market Grants Program were completed. The government's obligations were also met in 2009–10 and 2010–11.|
|Meet with grains industry representative bodies to discuss policy issues||3 meetings||Met||Met||Met|
|Performance: DAFF liaised regularly with peak bodies. This target was also met in 2010–11 and in 2009–10, when this indicator was introduced.|
|Meet with Wheat Exports Australia (WEA) to monitor operation of Wheat Export Marketing Act 2008||2 meetings||Met||Met||Met|
|Performance: DAFF met WEA at least quarterly in 2011–12. This target was also met in 2010–11 and 2009–10, when this indicator was introduced.|
|Levy payments made in accordance with statutory responsibilities||100%||Met||Met||Met|
|Performance: DAFF has regularly met this target. In 2011–12, all payments were made on time and in accordance with statutory responsibilities.|
|Meet with grains industry service provider to review obligations under the statutory responsibilities||2 meetings||Met||Met||–|
|Performance: The department met the Grains Research and Development Corporation at least quarterly. The target has been met every year since this indicator was introduced.|
|Grains Research and Development Corporation's compliance with statutory responsibilities||100%||Met||Met||Met|
|Performance: The department is satisfied that the GRDC met its planning, reporting and legislative obligations.|
|Minister/parliamentary secretary and executive satisfied with the quality and timeliness of policy advice and support||High level of satisfaction achieved||Met||–||–|
|Performance: DAFF has provided extensive policy advice and support to the minister and parliamentary secretary. This advice has been received with a high level of satisfaction.
This is a new indicator.
Outlook for 2012–13
Our priority will be implementing the changes to bulk wheat export marketing arrangements, including assisting industry to identify appropriate arrangements for the delivery of wheat market information.