It’s time to talk seriously about re-structuring the wheat industry in Western Australia and probably Australia. It’s time that wheat growers demanded recognition for the contribution they make to the national economy. When was the last time you heard the Prime Minister or the immediate past minister (Barnaby) or the current Federal Minister for Agriculture, or even the current crop of state ministers talk about the financial health of the producers of Australia’s biggest cash crop?
It’s time that the wheat industry faced reality, the bureaucracies they fund have failed them. Have a look at what Negative Profit means, it’s a euphemism for loss; then read on and tell me what you think, tell me if I am wrong in calling for change.
I blame politicians and their apparatchiks for my ever-increasing sense of despair regarding the future of this country and its agriculture. The evidence is clear and apparent. We are in debt up to our eyeballs and we shouldn’t be. We are a country rich in valuable natural resources from which we, the people, gain little benefit. We are rich in coal and gas and we have an power crisis for which we the people are paying dearly. Astonishingly, we continue to pay billions of dollars in subsidies to so-called renewable energy companies to generate the power we need, yet, even more astonishingly, we have failed to understand that when the wind doesn’t blow and the sun doesn’t shine, they don’t generate power. To add insult to injury the wind turbines and the solar panels used in this massive ‘con trick’ are imported, mainly from China.
In his first one hundred days in office the President of the United States has done something which the governments of Australia have been too frightened to do in a thousand days. The big message from the White House is that agriculture is important to America — the big message from Canberra is that agriculture isn’t important to Australia.
Sure, the Deputy Prime Minister of Australia is proud of agriculture’s contribution of $54 billion to the national economy. What he refuses to discuss in public is the lack of profitability for many of the producers who contribute to that $54 billion. He avoids discussing the ever increasing damage being caused by rural debt, low commodity prices, a poor and outdated infrastructure and a banking sector out of control.
President Trump, as one would expect coming from the dog eat dog construction and real estate industry in America, obviously knows the difference between strategy and tactics. Love him or hate him, respect him or despise him, he has achieved what many believed was impossible. The evidence is that both the Coalition and the Labor Party and all those strange individuals who nobody voted for, who spend their time scampering around the dark corners of Parliament House ‘currying favour’ and ‘horse trading’ with the future of this country, are all providing irrefutable evidence that they are seriously deficient in the strategy department. What they all have is a grab bag, a lucky dip of tactics. We are now running the country with party games. God save the Queen because nothing can save Australian politics.
About 2,500 years ago, Chinese military strategist Sun Tzu wrote “The Art of War.” In it, he said, “Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.” Barnaby Joyce could do worse than take a page out of Donald’s book — we’ll overlook plagiarism just this once. Look at what the President has asked the new Agriculture Secretary to do in the next 180 days. That is a business man speaking, bringing hard nosed business into politics. Will it work? Only time will tell.
Why do we put up with governments who do nothing for our national security?
It is Friday March 3 2017 at 08.00 hrs. On ABC AM this morning at about 10minutes 29 seconds into the programme, Andrew Davies from the Australian Strategic Policy Institute, announced we only have about three weeks supply of petrol in store in Australia — three weeks!! (search in the archive for the AM programme of March 3, otherwise you will get today’s programme) He raises the possibility of any tension between America and China could close off the sea route through the South China Sea and so cut of our supply of fuel from Singapore, on whom we are almost totally reliant. The story gets worse because it is not a new problem, there is a story in The Conversation from 2013 which forecast an impending fuel supply crisis unless the government of the day took strong action. It didn’t happen. The point needs to be made made it wouldn’t need a full blown war to disrupt fuel supplies, just a disagreement between the world super powers and the shipping routes that service Australia could close and we would run out of not only fuel but everything we import by sea.
In this issue I republish the simple truth from a leader in Australian grain marketing, Mr Palmquist from GrainCorp. He confronts us with the unpleasant reality that an antiquated infrastructure is being paid for by grain growers and I suppose by definition he is saying the only ones paying, are the growers. An expensive infrastructure, together with the poorest world wheat prices for more than a decade are wrecking the budgets of Australian wheat producers. This grain trader says he has no option but to pass the costs on to the grower — he would say that wouldn’t he? He only has to answer to shareholders — growers only have to answer to the bank. As an example he claims it’s cheaper to move grain from Ukraine to Indonesia than it is to move it 350 kilometers from Swan Hill to Geelong.
Two reports from the Australian Export Grains Innovation Centre (AEGIC) on the competition Australia will almost certainly face from Ukraine and Russia in the wheat markets of the future should be compulsory reading for all wheat farmers in Australia. They provide a sobering analysis of the wheat market and will force the sensible to seriously contemplate their future.
We live in a fantasy world, a world of illusion. The great task in life is to find reality.
Dame Iris Murdoch 1919 – 1999.
Stranger than fiction.
The post harvest stories, some of them as close to fiction as one can get without the author claiming to be a novelist, have recently appeared in both the national and the agricultural media. Minister Joyce is on the front foot; that is when it isn’t in his mouth, determined to persuade the Australian electorate, through a compliant media, that all is well in Australian agriculture and that the emerging Right in politics in Australia (Hanson) and around the world (Trump and Brexit), has nothing to offer to those who live outside the ever increasing majesty and grandeur of the State capital cities of Australia.
I have used the words ‘majesty and grandeur’ quite deliberately. Around Australia billion of dollars has been spent on State capital cities, much of that money is for the enjoyment and the pleasure of those who live in those cities. As we shall see, as billions has been spent on shoring up the city vote with new sports stadiums and the like, the infrastructure vital to agriculture has been allowed to deteriorate and in some cases decay to the extent that we are no longer world competitive — we can no longer, at times, but ever increasingly, compete for markets around the world.
The Nationals heartland is in rural Australia, it’s the country folk who get them into parliament. In WA they did a deal with the Liberal Party, which put the Liberals into government and some National members into key positions in the WA Government. Again, and have we seen it too often, a minority determining government policy? The Nationals are now worried that Hanson, the Hunters Shooters and Fishers Party and maybe others will replace them in Parliaments around the country and in so doing, replace them in holding the balance of power.
Minister Joyce wants everyone in the country to believe that record high prices for livestock and an ever-increasing demand for wool are the beginning, as one journalist put it, of a ‘golden era’ for the farmers of Australia. Coupled with what some are calling a record harvest, what could possibly go wrong for Minister Joyce and the wheat farmers of Australia? Well this for starters. Continue reading “Is the Australian wheat industry finished?”
The World Wheat Market – Where is it going and where are we going with it?
The recent comments reported to be made by Greg Harvey, Interflour’s Australian born Chief Executive, that Australian wheat is too expensive for the markets in Indonesia and Singapore defies belief. If we cannot be competitive in the big and expanding markets on our doorstep, with wheat at the price it is at present, where will that leave Australian grain merchants selling into markets around the world? What price for growers at the next harvest?
The move into Interflour was strategic for Cooperative Bulk handling making vertical integration a reality for Australian wheat growers. Recent announcements have reported Interflour expanding into Vietnam. Cooperative Bulk Handling the West Australian grain handling and marketing cooperative owns 50% of Interflour. Interflour, which now owns nine flour mills across Vietnam, Indonesia, Malaysia and Turkey is, one would think, integral to the prosperity of WA wheat production, if it is to meet the challenges of market expansion in the region in which Interflour operate.
This story fits in quite nicely with another story. A few years ago I was talking to a lady whose family had decided to build a new biscuit factory in Indonesia rather than Perth and then export their biscuits into Australia and around the world. I found their biscuits and good they were too, on the shelves of Woolworths. Out of curiosity and because of what was on their label I phoned their Perth office. The lady was quite open in claiming that it was cheaper ‘for them’ to build a new factory and manufacture in Indonesia than in Perth. She claimed their factory was as clean as any Australian hospital and having a base in Indonesia it opened up the world wide Halal biscuit market to them.
I said I hoped they always used Australian wheat. Her answer was something like ,’We do when we can, at the moment we are using British wheat. Sometimes we can’t get Australian wheat.’ I never thought to ask if that was because of price — It never entered my head. If Australian wheat remains too expensive — just look at the markets below.
So who in this land of the free protects the weak and poor, like the Cronin family, from the financially strong like Ferrier Hodgson and the National Australia Bank? The answer is nobody, at least nobody that we have been able to find—we are still looking.
Man walks up to jewellers shop window, chucks a brick through it, grabs a couple of trays of diamond rings and then an hour or two later finds himself wearing steel bracelets and in the back of a Paddy Wagon.
His mate, who the robber had taken into his confidence, had hidden around the corner, took a video of the robbery, sold it to the police and collected the reward.
No excuses for the NRL player recently videoed behaving very badly, but the cockroach, the traitor who took and sold the pictures got something like $40k from the media scum is different. That cockroach deserves a punishment far worse than that metered out to the player.
The other one dobbed in his mate and if he has any vestige of a conscience will have to live with his treachery all of his life.
What motivated the two video enthusiasts? Greed. Greed caused the Global Financial Crisis and few if any ‘on Wall Street’ who caused that crisis were punished, they took their government funded retirement packages and disappeared as wealthy men.
Money Never Sleeps – Neither do the Greedy.
Perversely the 2010 film ‘Wall Street-Money Never Sleeps’ the sequel to the famous 1987 film ‘Wall Street’ starring Michael Douglas became almost cult films. Both stories concentrated on greed and both, apparently, caused a rush of graduate applicants both in America and the UK wanting to work in the banking industry.
One of the few advantages of being over a three quarters of a century young is (thankfully) I can still look back with a deal of clarity and compare yesteryear with today. Don’t jump to conclusions—this is not about the good old days. I have only reached this age because there are cures for what killed many of my ancestors. ‘Jack the Magic Dancer’ is not the man he was and I continue, helped by some very clever people, to beat him. I cannot help but compare our wonderful health system with our antiquated legal system. It is as if we are frightened to change, little realising that an antiquated legal system increases the cost of the health service. Think about it.
My age and my experience were on my mind a lot while was writing the last two episodes of the Global Farmer. I have contemplated if the world has changed or whether I have? Whenever I have started to write this series, the word GREED has materialised on the screen—so I thought this month I should pay it some attention.
I should also declare I have only been to one mortgagee’s sale in my life. I only went to fly the flag. I was a farm manager so the chequebook wasn’t all mine but there was nothing to stop me, for a mate, pushing the bidding if needed.
I saw the mortgagor’s wife in tears while she was serving tea and sandwiches with the other ladies from the CWA. I didn’t stay for the sale. The mortgagor had borrowed to pay a family member out who was a ‘sleeper’ in the family farm. Then we had two dry years and he had a fire over half the farm. I learned later they had a good sale, the neighbours rallied round so he didn’t need me after all. Someone bought his farm ute and gave it back to him.
Then I heard that a neighbour had bought the farm from the receivers and leased it back to the original owner. That was back in the 70s. Maybe many of us were still pulling chains and rakes around clearing land, just like those before us had done going back generations? Maybe there were too many ‘battlers’ there to kick a ‘mate’ when he was down? There were the exceptions of course, there were the ‘greedy’ ones hunting a bargain, but the neighbours outbid them.
The Cronin family deserve answers from Ferrier Hodgson and the National Australia Bank, answers which at the time of writing they are both either refusing to answer all questions or they are giving what can only be called puerile reasons for delaying answering our questions. The law protects the mortgagor. The law says that all the financial activities of the receiver manager and the manager in possession for the mortgagee, must be transparent and made available to the mortgagor. The National Australia Bank and their appointee Ferrier Hodgson appear to disagree with the law. So persistence is our only recourse.
The stand out feature following the publication of ‘National Bank Bastardry’ in the last issue of the ‘Global Farmer’ was the number of people, including those on Facebook, who encouraged us to keep on going with the story and wished the Cronin family all the best for Christmas and especially for a better New Year. Many identified with the Cronin’s problems, some related ‘tough’ experiences with their bank and as a result, did not want to go public with either their name or their story, except to say they had one. That is not a healthy relationship between borrower and lender – between the farmers and their banks. For every Charlie Phillott in Queensland and Cronin family in Western Australia, it appears there are many others with similar stories, which will never be told.
Smoke Screens and Threats.
Harold Cronin wrote to Ferrier Hodgson (FH), appointed by the National Australia Bank (NAB) as the receiver managers and manager for the mortgagee in possession of what was formerly Chambejo Farms, the Cronin family farming business. He asked for a copy of all (two or three) the valuations on Chambejo Farms that FH had commissioned from a firm of valuers, Opteon, and for which Chambejo Farms had paid. Harold wrote based on this advice:
The Corporations Act obliges receivers to keep financial records that “correctly record and explain” transactions they enter into while they are controlling a company. Directors and shareholders of the company have the right to inspect those records. These provisions appear in section 421 of the Act.
What follows is the body of the letter he got back from FH. It appears to be the very antithesis of section 421 0f the Corporations Act. If you don’t want to read the whole letter here is a short review, you should read the letter, because it’s a blinder:
FH wrote back to Harold and stated that they couldn’t release the information he requested because they, FH, had signed an agreement with Opteon invoking the Privacy Act 1988. Their contention was and is that the results of the valuations, paid for by Chambejo Farms as mortgagor are secret and unavailable to Chambejo Farms unless they signed an agreement, which absolved Opteon and FH from any action or proceedings based on the valuations. Even if they signed, it only meant that FH and Opteon would further consider the request; in effect they could still say no. It’s true – FH and Opteon wanted Harold and his family and their Trustee in Bankruptcy to give them an escape from possible prosecution. Why would they do that? It’s obvious isn’t it?
Over recent times as Australian agriculture has endured droughts, poor prices and incompetent governments; amid the chaos there have been two major overriding topics for discussion.
The first has been trying to separate the rumours, the gossip and the chit chat from the truth regarding the extent, the size of Chinese investment in Australian agriculture, in land, as distinct from agribusiness or food processing.
There is a body of opinion that claims Chinese interests, including Sovereign Funds have made substantial purchases of land in Australia, using a variety of investment vehicles, which have enabled them to avoid scrutiny by the Foreign Investment Review Board (FIRB).
We have the figures from the FIRB and we name who the biggest investors in Australia agriculture have been over recent times and the results will surprise you. China is at the bottom of the list, below Hong Kong. So why the public and in some cases political interest in China who ‘officially’ appear to be a minor investor? Is it xenophobia, fear, nationalism? — they all mean the same thing really. Do we fear China and is that because we don’t understand them? Whose fault is that?
These are difficult questions for us as a people and as an industry. It is a far more serious question for the media, and I believe the media should shoulder a great deal of the blame, because they have wrung every bit of emotion they can out of China and Chinese investment in Australia, giving voice to rumour and innuendo. Yet the records show that the media have been at least less than diligent and probably lazy in failing to report who the big, billion dollar plus, non-Chinese investors have been in Australian agricultural land over recent years.
The second big question is, forgetting agriculture, can we now manage, as a country, without China? We have all but exported our manufacturing base, everything from engineering, to clothing to hardware to food processing — you name it, what we once made ourselves we now get from China.
If it’s ‘Made in China’ it’s designed to be affordable. The more we buy from China the more dependent we become on them and the more vulnerable we are as the alternatives become uncompetitive.
The resource boom of the last last decade should have made Australia strong but there’s a fly in the ointment, Barclay’s Bank Kieran Davies reports that Australian household debt is equal to 130% of Gross Domestic Product (GDP) this compares to an average of 78% average across the advanced world making us more vulnerable than most to another financial crisis.
So we’ve spent the boom on paying ourselves wages and salaries big enough to build the biggest houses in the world with ‘entertainment centres’ and a bathroom for every resident, double garages to hold the boat and the dual cab 4wd ‘trucks’. Enough left over to holidays to exotic destinations and the like — instead of spending our money on our country, on the infrastructure future generations will need to make us world competitive.
China is now the world’s largest economy. America will fight them for that position — but no matter what happens, China’s influence on the Australia will continue to grow.
Australia’s challenge will be to find the point of balance in our relationship between our greatest ally, America, and the country we cannot manage without — China.