Monday, March 29, 2010

Improve industry information flows

The Productivity Commission (PC) has backed ProFarmer calls to widen the provision of timely and accurate information in its draft report on Wheat Export Marketing Arrangements. In its report, it says that ‘Timely and accurate information is important for supporting an efficient bulk wheat export market’.

The Commission considers that provision of regular and timely information on stocks by state is essential to support an efficient wheat market.

Currently the PC views that the Value of disaggregated stocks info accrues to the bulk handling companies. Although the Commission acknowledges that unequal access to more disaggregated stocks information confers a marketing advantage on the trading bulk handling companies, that advantage is a consequence of the business model the bulk handlers have invested in (except CBH which is apparently a co-operative and acts in the interests of its members rather than its shareholders).

In its report the PC says the availability of information is critical for the efficient and effective operation of the bulk wheat export market. Information supports and guides grower production and investment decisions, marketing decisions, and the operation and use of transport, storage and port terminal services. Information can also facilitate effective competition.

It was considered that some market participants have greater access to information on the volume and quality of stocks information than others, and that this information asymmetry gives rise to competition concerns.

The publication of national wheat stocks information is a basic prerequisite for any competitive wheat exporting region. International customers will consider many variables ahead of deciding where to purchase wheat, including, for example, stocks in each region, freight costs, trade restrictions and reputation. Wheat stocks information is a critical driver of customer and trader purchasing decisions.

If customers and traders do not have access to information on Australian wheat stocks, they cannot verify whether the Australian market holds sufficient volumes of wheat to meet their demands. Withholding this information from the market therefore risks deterring international customers and traders from buying wheat from Australia.

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