The Kailis and Paspaley families can look forward to continued dominance of Australia’s pearling industry after a major review recommended only gradual changes to the current quota production system.
The Kailis and Paspaley families can look forward to continued dominance of Australia’s pearling industry after a major review recommended only gradual changes to the current quota production system.
The review, chaired by marketing executive and former West Coast Eagles chairman Mike Smith, said the industry should be responsible for controlling changes to quotas.
Fisheries Minister Jon Ford will make a final decision on changes to the quota policy, which expires in December this year.
The review noted that the current policy was introduced when the industry was dominated by ‘wild stock’ production, but over the past decade the volume and quality of hatchery production have risen.
The result is that growth in pearl supplies (in Australia and internat-ionally) has outstripped growth in pearl demand, leading to a substantial decline in prices and industry profits.
The review concluded that the best way forward for the industry was through “continued restraint on the rate of growth of supply”.
It said Australian pearls are larger and of better quality that overseas pearls and it believes Australian producers can maintain their premium standing “for some time into the future”.
The recommendation that tight industry regulation should continue accords with the wishes of most producers.
The report said eight of the industry’s nine producers (who hold 15 of the 16 licences in WA) believed that all future quota applications should be on a pro rata basis to existing producers.
It noted that any quota changes that were not proportional to current quota holdings could be subject to “substantial legal challenge”.
This approach would entrench the influence of Paspaley Pearling Company, which holds four WA licences, and MG Kailis Group, which holds three WA licences.
The report said the ideal goal would be to set quotas at a level that maximised industry profits,
“A more realistic objective is to set the quota level such that supply grows over time, broadly in line with demand, in a way that does not cause prices to fall substantially,” it said.
The review committee has recommended that licence holders should meet at least every two years to consider changes to quota levels.
They would evaluate changes according to several criteria, including the degree to which Australian product remains differentiated from other product.
They would also take account of industry profitability as well as international production and technology trends.
The review said changes should be voted on by current producers and should require 75 per cent support before proceeding.
“This industry process is seen to be evolutionary and the expectation is for the industry to mature and become more sophisticated in the development of the assessment process,” the review said.
It added that, if information supports a change to quota levels but the industry cannot agree, the minister could make a decision.
Despite its support for regulation, the report asserts that its approach accords with market principles.
“The allocation of quota through an administrative mechanism is consistent with economic efficiency principles, provided that the quota is freely tradeable,” it said
“This framework of freely tradeable quota enables new entry to the industry – there are no barriers to entry.”
