Monday, July 6, 2009

Information is a right for all

I have had better weeks; I got into another car bingle and both my footy teams lost again, meaning another quiet September (I might go on holidays or take up another hobby like gardening – except I don’t have a garden). At least it is raining - it’s a pity grain markets are in a coma and stuck in a trance following financials.

Anyway, I want to continue to press an issue that I have been banging on about for a while. It concerns the release of market critical information. It seems the debate has been polarised by the noisy minority who don’t want to tell anyone anything to the exporters who want to know everything. The problem with this is it is easy for CBH to run interference to their betterment.

CBH have gone to ground on the whole affair. They won’t even release results of a survey they took of growers on this issue, on the grounds that ProFarmer will misconstrue the data (I found this quite offensive). The survey we conducted with suggested that 87% of the 1078 growers who voted, agreed that the bulk handlers should be compelled to release more aggregate information. I have provided CBH with formal, peer reviewed economic studies that suggest that information facilitates trade and overcomes market inefficiencies. CBH conveniently fail to acknowledge these ‘established’ economic theories.

The sad thing is that CBH won’t even enter into a debate about the subject. They are showing clear signs that they intend to abuse their market power by withholding information for as long as they can– but to whose benefit? The Grain Pool and Agracorp have a vested interest in withholding this data because as market leaders they have better information than any of their competitors – this benefit will erode as their market share diminishes. That is if you believe that the Chinese walls between their operations and trading teams are effective.

Growers are kidding themselves if they believe withholding data is to their benefit. All the buyers they are selling grain to have much more sophisticated market intelligence systems, and the grower only sees the information from their own port hole.

In their submission to the ACCC, CBH reckon ABS and ABARE release sufficient data to the market. But there are gaping holes. The ABS and ABARE stocks and usage information is dated (5-8 weeks late), and only covers wheat (what’s the integrity of this data). They fail to release information on other commodities and the ABS excludes barley exports that are only released at a national level (state export data is deferred by six months – a hangover from statutory market days) meaning it is impossible to formulate an east coast feed grain balance sheet.

Plus we only have a quarterly production report (which is survey based after consultation with industry experts i.e., CBH and their counterparts); no planting intentions, actual plantings or abandonment statistics or ongoing weekly crop conditions, receivals and exports.Some groups want CBH to release a plethora of information. We don’t agree this is necessary, but if CBH continue to stonewall on the release of basic data they will further alienate the people they are supposed to serve.

We need a new information regime that reflects the needs of a changing market. Next week we will articulate the types of data our competitors release to benefit market participants.

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