THE key to a successful deregulated wheat market lies with competition in the supply chain, according to an industry leader.
BRI Research chairman Tom Keene said the Productivity Commission found the deregulation of the Australian wheat industry in 2008 had been successful, judging by the number of entrants into the market and the number of new markets now buying Australian wheat.
Speaking at the Australasian Milling Conference in Melbourne last week, the former GrainCorp managing director said the success of deregulation could be threatened by owners of bulk-handling facilities.
The Productivity Commission report, released last month, showed almost two-thirds of wheat exports in the first year of deregulation were carried out by three companies with extensive storage and handling assets: AWB Limited, CBH Group and GrainCorp.
That was despite 29 exporters being accredited to ship Australian wheat overseas.
"Those who own the storage systems and the facilities and the assets are getting the larger share of the market," Mr Keene said.
"If you own the supply chain, you are able to execute the exports.
"The challenge to all of us is to ensure the benefits of this open and contested market are not extracted by individual companies through monopoly rents.
"We must keep the contestability in the supply chain as well as in the product itself."
Mr Keene said new entrants into the market since deregulation had brought with them capital, finance and new products and services.
He said interest in Australian wheat had "never been higher", with a number of recent mergers, acquisitions and joint ventures.
Mr Keene said new entrants had also brought with them new buyers of Australian wheat.
He said two areas of the export wheat market which remained unresolved since deregulation were technical market support and generic promotion of Australian wheat.
"As an industry, we are not sufficiently promoting the Australian brand of wheat," Mr Keene said.
