Nalder moves on potatoes

Agriculture Minister Dean Nalder has made his first major move since being given the role, announcing the deregulation of the state’s potato industry and a $14 million compensation package for growers.

The move will mean the abolition on July 1 of the so called “spud cop”, the Potato Marketing Corporation, which has powers to control the production of each grower.

Export and seed potatoes have already been deregulated, with the latest move affecting only the production of ware potatoes, which are bought by consumers at supermarkets.

Mr Nalder touted the industry’s future as being export-led and said the move would help growers build economies of scale.

He said it would bring certainty to farmers, while enabling growers of other vegetables to produce potatoes as a rotation crop.

“One of the things coming in as the new agriculture minister is that I was advised that the industry were really seeking certainty as quickly as possible,” Mr Nalder said.

“Today’s announcement is about providing certainty to the market.”

Funded through the Royalties for Regions scheme, about $2 million of the compensation package will be allocated to industry development, with the remainder to support grower adjustment.

The details of the adjustment package are yet to be ironed out, but the $12 million figure marries closely with estimates by the Economic Regulation Authority of the benefit that would flow to farmers from the scheme in the next 15 years.

The Potato Growers Association said it had wanted nearly twice that amount, however, and was critical that the government had not briefed growers before the announcement.

Business News will host Tony Galati at the next Success & Leadership breakfast on May 18.

The announcement comes more than a year after Business News spoke exclusively to grower Tony Galati, who said he would rather go to jail than stop doing what he loved.

Mr Galati had given away excess potatoes for free from his Spudshed chain of stores, while the Potato Marketing Corporation demanded they be dumped or fed to cattle.

That followed an oversupply in the market kicked off by the ERA report favouring deregulation in June 2014.

The corporation then pursued various legal remedies against Mr Galati, including an injunction.

To produce potatoes under this existing heavily regulated structure, growers must buy domestic market entitlements, a quantity restriction, and pay a tax of around 13 cents per kilogram.

That small number adds up, with the Economic Regulation Authority finding the system would cost consumers $44 million in the 15 years from 2014.

Chamber of Commerce and Industry WA chief executive Deidre Willmott backed deregulation, saying the archaic system had made the state a national laughing stock.

“Lifting these ridiculous restrictions will stimulate growth and competition in Western Australia’s potato industry,” Ms Willmott said.

“CCI has long called for deregulation of the potato industry and we thank the state government for finally following through on their commitment and for further removing unnecessary red tape that hinders the business community.”

Potato Growers Association chief executive officer Simon Moltoni said growers had accepted the government’s decision last year to deregulate the industry.

“We then prepared a very detailed and balanced transition plan for the government that included the option of bringing the deregulation date forward whilst providing a grower adjustment package of $24 million that would help growers reinvest into building considerable capacity for potatoes as a vibrant food in the region," he said.

“It was a total package, yet the government has chosen to bring forward the deregulation date but ignore the recommendations of the ACIL Allen Report that growers receive the fully costed and justified (package)”.

Taxis 

Mr Nalder said the compensation payment should not be seen as a precedent for assistance to the taxi industry, which is also being reformed.

“I’m keen to get it (reform) through as soon as possible," he said

“We want to make (the regulatory changes) effective July 1.

“(Additionally) there are legislative changes that are required, so it will be a two phase program." 

He didn’t rule compensation in or out, however, adding that the government would continue to protect rank and hail services.