Industry good functions necessary for an efficient and competitive Australian grain industry

Ten years on from the deregulation of the Australian grain industry, marketing conditions for Australian grain remain positive. This is indicated by the increasing premiums received for Australian grain over international grain price benchmarks and the large number of active grain buyers in the market. Australian grain continues to have access to all major markets and there appears to be no obvious signs of market failure.

However, the Australian grain industry is facing challenges to its international competitiveness. Some of these are coming from the rise of lower cost, international producers such as the Black Sea region, which may start to erode demand and premiums for Australian grain going into key markets, particularly Asia.

There are also local political and social challenges affecting Australian growers’ ability to produce grain efficiently and sustainably. This includes the potential ban or restriction on the use of important genetics, chemistry and technology.

Growers and grower representative groups need to improve their engagement with the wider community if they are to meet the agronomical, political and economic challenges of the future. The industry needs to be well researched and informed, and present a united front with a consistent message. Improved funding structures may need to be considered for grower representative groups to ensure sufficient resources are available to meet these challenges and to minimise the free-rider affect.

To maintain competitiveness, the industry would benefit from continued investment in market access and market support activities, such as facilitating trade agreements, promoting Australian grain and after sales support. However, this investment needs to be more coordinated and strategic than it is currently. The industry would also benefit from increased availability of supply and demand information. Ideally, this would be done on a voluntary or industry regulated basis. A failure to do so may see more burdensome and less effective government regulations enforced.

The United States (US) and Canadian grain industries are dealing with similar challenges as Australia. Of the three countries, the US appears to provide the most complete delivery of industry good functions, according to the author. The Canadian and Australian industries are much less mature, more fragmented and have less access to funding compared to the US.

The delivery of industry good functions in Australia would be more efficient and effective if the providers specialised on certain functions rather than duplicating roles, as is currently occurring. This will require more coordination between providers and may involve the consolidation of industry organisations.