World Grain - September 2014 - 56

FEATURE: Q&A WITH PETER WOODS

University of Sydney and Orange
Agricultural College and leased a property in the Bathurst district where he
managed a 4,000-sheep enterprise.
Most recently, Woods co-founded an
innovative grain marketing start-up called
AvantAgri. World Grain recently interviewed Woods to get his thoughts on the
fast-changing Australian grain industry.
WG: Would you say the Australian
wheat liberalization process over the last
decade and more has been a success?
Woods: The big gains for the
Australian grain industry were achieved
when the domestic market was deregulated in the 1990s and growers were no
longer forced to deliver grain to an export-based pool in drought years. That
process also opened up the forward market for growers and the cash market during and after harvest. The export bulk
wheat liberalization process was, for
its speed, relatively smooth. Exporters
knew that there would probably be some
short-term issues that would need to be
managed. These were largely with shipping stems, industry good functions and
managing the legislative changes.
WG: What were your main achievements at Wheat Exports Australia in
terms of smoothing the transition?
Woods: The main achievement
was providing some regulatory stability during a period of turmoil in the
Australian export wheat industry. The
agency took pride in the fact that it
was seen as useful and necessary by
government and growers from 2007
to 2012. WEA was a team of committed individuals, mostly with an
agricultural background, who cared
about agriculture. I hope WEA was
viewed as a responsive yet responsible
agency that implemented a wide and
diverse range of legislation in record
time, including a bag and container
quality assurance scheme in 2007
and, in 2008, a bulk wheat export
accreditation scheme.
WG: What are your main regrets in
terms of reforms that you would like to
56

have seen implemented?
Woods: I believe that the WEA no
longer needed to be regulating bulk exports, but there was and probably still is
a need for some sort of assurance/regulation on the quality of Australian grain
exported. Yes, there are contractual
obligations between the seller and the
buyer in terms of quality, but this is only
regarding protein, screenings, moisture
and test weight. There is no binding
obligation regarding fit for purpose, by
that I mean restrictions on blending.
WG: Do you think there should be
more curbs on blending?
Woods: There is nothing wrong with
blending. It is done across the world.
Specifically, I mean not being able to
blend across grades, for example, not
blending biscuit wheat with milling
wheat or noodle wheat. This is not done
on a large scale but those few who do
it run the risk of damaging Australia's
reputation as a supplier of quality.
Flour millers produce flours for different uses, and they need to be assured
that the Australian wheat they receive
is fit for purpose.
WG: Could other parts of Australian
agriculture learn from the experience
of the wheat sector and the reforms
it underwent?
Woods: I think it may be better to
ask why didn't the wheat sector learn
from the experience of the wool sector, the dairy sector or the failed NSW
Grain Board? Because of entrenched
positions in the various state grower
organizations regarding the single export desk held by AWB, which in the
end was revoked without any government assistance package for growers.
Nor was there any significant reduction
in trade barriers for Australian grain or
commodity exports on the international
side, in comparison to the dairy industry, that received almost A$2 billion for
structural adjustment pressures when it
was deregulated in 1999.
WG: Have growers been among the
winners of liberalization?

Woods: Although growers have
gained more transparent prices as a result of wheat liberalization, there have
been some negatives. Growers have
more choice now that the market is fully
deregulated - there is better and more
transparent price discovery - but growers who have not adapted their marketing strategies to the new environment
will not be getting a better deal.
WG: Please explain more?
Woods: Well, feed barley prices are
now more heavily discounted against
wheat. Malt barley premiums are now
lower than they were under regulation.
And at times Australian wheat prices
are driven by things other than the underlying global wheat market, creating
winners and losers across the Australian
wheat belt, depending on logistics issues, trader positions and grower behavior. When bulk exports were regulated,
domestic end-users had to accumulate
grain at harvest, and during the year
prices tended to be harvest price plus
storage and carry. In a deregulated market, and with growers storing more on
farm or warehoused in the bulk handling system for sale during the year,
domestic end users and domestic traders
simply have to price grain at just above
export parity to get what they need during the year, and they do not accumulate
as much at harvest time. However, in
dry seasons, domestic end users are now
having to outbid bulk exporters who
may be short, rather than just needing to
attract grain away from a regulated pool
or outcompete other domestic end users.
This creates supply uncertainty in the
face of limited or restricted stock information to the broader market.
WG: Do you think Australian growers
are being rewarded for bringing quality
to market?
Woods: The current market does
not reward growers for quality apart
from grade allocations which have
created cliff face pricing at key protein levels. There is now a need to be
careful as some exporters only operate

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World Grain - September 2014

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