Cronyism buys into wheat sales

Australian wheat marketing arrangements are a monument to why trade policy and politics don't mix.

A Federal Court decision last week was a victory for cronyism and vested interests at the expense of the public interest.  The Federal Court ruled on a case between niche wheat and grain exporter OzEpulse and the Minister for Agriculture, Fisheries and Forestry, Peter McGauran.

Under current wheat marketing arrangements, the veto for wheat exports, previously held by AWB, is held by the minister to exercise in the "public interest".

OzEpulse appealed against the procedural fairness of the minister's decision rejecting its applications.

The minister took advice from AWB and did not define the "public interest" test before OzEpulse's application.  The judge decided the minister followed due process in rejecting the applications.

One of the three applications was to amend an existing licence to export 10,000 tonnes of wheat to Italy in containers.  OzEpulse wanted to export it in bulk because it reduced costs and boosted profits.

It is inconsistent with the minister's obligation to act in the public interest to oppose exports simply because of the mode of delivery.  The minister's decision is only the latest in Australia's sad wheat export tale.

Current wheat marketing policy was developed post-war to secure income for growers.  The Hawke/Keating and Howard governments made reforms to liberalise the sector.  But their efforts are still a long way from achieving the national interest -- a free market in wheat exports.

Recognising the political potency of wheat politics, particularly in Western Australia, the ALP has committed to deregulate.  Its policy proposes a single desk that would accredit exporters to maintain standards, but otherwise allow for a free market.

Considering Kevin Rudd's me-tooism, wheat is likely to be one of the few stark areas of policy difference between the ALP and the coalition.

The coalition's policy is one step forward, two steps back.  Driven by the Nationals, a new self-appointed organisation, the Wheat Export Marketing Alliance (WEMA), looks set to be gifted the single desk and its veto.

Raising finance for WEMA has been slow, but Nationals leader Mark Vaile has already provided financial assistance for a business plan and is spruiking more.

Not surprisingly the most vocal supporters are the wheat growers in the eastern wheat belt that bears a strikingly similar footprint to the Nationals' heartland.  Meanwhile WA growers are forced to accept lower payments and cannot target premium markets.

Current arrangements are a testament to the Nationals' claim that they represent the interests of farmers in government, but they come at the expense of wheat farmers outside Nationals' electorates, and the public interest.

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