“Any removal of the single wheat desk would be anti-wheat farmers and anti-competitive." said Senator Joyce today.
“Currently, the Single Desk allows wheat farmers to collectively bargain with monopoly operators of transport, storage, handling and ports. Remove that single desk and you destroy farmers’ livelihoods.
“Collective bargaining by farmers allows them to secure competitive outcomes when dealing with the monopolies that operate in other parts of the wheat export market. Remove the Single Desk and you stop the efficient collective bargaining by farmers through the single wheat desk.
“Collective bargaining gives farmers countervailing power when faced with monopoly or dominant buyers of their wheat. Remove that countervailing power and farmers will be at the mercy of existing monopolies in transport, storage, handling and ports.
“Experience in other industries, such as milk, shows that wheat farmers would see their returns diminish over time to uneconomic levels as the other monopoly elements in the wheat export market exert their monopoly power.
“There is nothing to stop those monopoly elements from exploiting their monopoly power against wheat farmers. Section 46 of the Trade Practices Act will not stop those abuses of market power. An effective s 46 is critical to promoting competitive outcomes. Changes proposed by the Labor Government are cosmetic and won’t prevent wheat farmers from being exploited.
“Only a general divestiture power under the Trade Practices Act would stop monopolies from abusing their market power. Australia is out of step with the United States in not having a divestiture power, said Senator Joyce.
“Removing the Single Desk, while leaving the other monopoly elements intact, is anti-competitive.
“Once the Single Desk is removed, there is nothing stopping vertical integration across the wheat export market to the detriment of wheat farmers.
“Given the ACCC’s loss in a Federal Court decision involving AGL’s acquisition of an ownership interest in the Loy Yang power station in Victoria, the ACCC would find it near impossible to stop such vertical integration. The current merger section of the Trade Practices Act - section 50 – would not prevent vertical integration of the wheat export market, to the detriment of wheat farmers.
“Removal of the Single Desk for wheat, while maintaining the monopoly elements in the other parts of the wheat export market, is a flawed policy from a competition law point of view.
“A competitive market requires that all elements of the relevant market be truly competitive. To deregulate the Single Desk and leave the other monopoly elements in the wheat export market unchanged is simply to distort the market for the benefit of the bulk handlers and to the severe detriment of wheat farmers.
Ends