Calls for deregulation of wheat market

The Productivity Commission has recommended further deregulation of Australia's wheat export market.

In a draft report released on Monday, the commission said the transition from the single desk system to a competition-based model had progressed relatively smoothly.

But there was now scope to reduce regulation further, the commission said.

"The commission recognises that the transition period has been difficult for some growers, particularly smaller ones.

"However, the industry has proved adaptable and resilient in the past and the commission considers that both the interests of the industry and the wider community would be best served by continuing deregulation of the bulk wheat export market."

The single desk system was abolished in the wake of the AWB scandal, which involved the monopoly wheat exporter paying more than $290 million in kickbacks to the regime of former Iraqi president Saddam Hussein.

The payments were disguised as fees to Alia, a Jordanian company partly owned by the Iraqi Ministry of Transport, and were made in exchange for access to the country's lucrative wheat markets.

To date, 29 bulk wheat exporters have been accredited under the new system.

The report also shows there had been a rise in the number of countries taking Australian wheat exports from 17 in 2007-08 to 41 in 2008-09, the first year under the current arrangements.

More than 12 million tonnes of wheat was exported in 2009-09.

The commission is calling for submissions and will hold public hearings on the draft report in late April and May, with a final report to presented to the federal government by July 1.