THE chances of salvaging up to $300 million worth of Western Australian wheat exports to Indonesia appear to have worsened despite recent Federal Government attempts to appease the largest private buyer of Australia’s wheat.
THE chances of salvaging up to $300 million worth of Western Australian wheat exports to Indonesia appear to have worsened despite recent Federal Government attempts to appease the largest private buyer of Australia’s wheat.
Last month Trade Minister Mark Vaile wrote to Indonesian flour miller Bogasari to reassure the company of its trade relationship with Australia.
However, Bogasari’s Australian consultant Roger Simpson told WA Business News Mr Vaile’s correspondence was “patronising” and had only “inflamed” the situation.
“Mr Vaile’s letter didn’t contribute or add anything to the difficult issue,” Mr Simpson said.
He said Bogasari had wanted an acknowledgment from the Australian Government that it would not intervene as it had done in the past in a way that had been negative to Bogasari and the Indonesian flour industry.
Bogasari head Piet Yap has threatened to slash total annual purchases of about 1.3 million tonnes (made up of about 80 per cent WA wheat) because of support he claimed the Australian Government was giving to low-priced Australian flour exports into Indonesia.
In March Mr Yap alleged that New South Wales flour miller Manildra was dumping flour into Indonesia to the detriment of the local flour industry and called on the Federal Government to act.
He also said he was investigating other sources of wheat in Europe and India.
Mr Yap will arrive in France within the next two weeks to meet with European wheat sellers.
He was forced to delay his European trip, initially planned for the beginning of May, to attend to urgent family business in the US.
Mr Simpson said while Bogasari was “quite satisfied” with the current commercial arrangements for the purchase of Australian wheat, it had been forced to look elsewhere because of the cheaper flour imports.
WAFarmers grains section president Peter Wahlsten said the dumping issue had been festering for two or three years and needed to be defused.
Mr Wahlsten said Mr Vaile’s letter did not defuse the situation and, as a result, WA farmers could suffer.
He said the Australian Government needed to reassure Bogasari that it would abide by World Trade Organisation rules and was not exerting any undue pressure on the Indonesian Government or anyone else.
“We do understand that in business they [Bogasari] have a right to pursue their position,” Mr Wahlsten said.
“Bogasari has been complaining about the Federal Government and we would ask them [the Government] to defuse the situation.”
A spokesman for Mr Vaile would not comment in relation to Mr Simpson’s claims.
He said the Minister had an excellent relationship with Mr Yap and Bogasari.
“We respect both him and his company, we do abide by WTO rules and are not seeking to pressure anyone,” the spokesman said.
He would not disclose what actions the Minister would or would not be taking, only saying the situation would be monitored.
AWB WA manager Paul Ryan said the Indonesian market was very valuable and Bogasari’s concerns had been raised with the Federal Government.
However, he said AWB had taken what action it considered appropriate and it was now a government to government issue.
Bogasari’s recent posturing is nothing new.
The Indonesian flour industry, which imports about $500 million worth of Australian wheat a year, has been concerned about lower-priced imports for a number of years. Bogasari, a former State-owned company dominates the local market.
In 2000 Manildra was found to be dumping flour in Indonesia, however, it challenged the finding.
Other flour exporters including producers from Europe and the United Arab Emirates have also been caught dumping in Indonesia.
