WA grain growers proceed with class action against Emerald

Updated August 13, 2013 09:06:29

Audio: Nathan Draper speaking with Belinda Varischetti (ABC Rural)

The legal firm representing about 70 WA grain growers says it will proceed with a class action against Emerald Grain over the performance of the company's 2011/2012 grain pool.

Earlier this year Tom Howard the General Manager of distribution at Emerald Grain admitted the pool had underperformed and the losses ran into millions of dollars.

A grain pool is basically a collection of growers grain which captures value in price through a period of time and then gives the grower an average price over that period of time.

It's very much like a managed fund but in this case it's grain rather than dollars invested.

Nathan Draper is a lawyer with Granich Partners.

His firm commissioned a report comparing 2011/2012 pool returns from a range of grain marketers to WA growers.

He said based on the findings in that report, he's confident the growers' have a solid case.

"The finding from our experts was that depending on the grade of wheat there's a variation in the returns received by Emerald compared to the others between $82 and $64 per tonne. Our experts have also provided us with three possible reasons why this has occurred and they have said that given at the time of the sale of the wheat when the wheat was profitable due to a drought in the United States that Emerald should have been earning far more for their wheat per tonne than it appears they did do. Secondly based on evidence our experts have received it would appear that Emerald has extensively overbooked the shipping slots which has resulted in a liability for Emerald having to pay for shipping slots it cannot use due to its failure to secure efficient amounts or tonnages of wheat to export and the final reason is that due to the practices by Emerald, most notably its marketing practices they have failed to trade grain as profitably as they should have done, which has resulted in losses or costs that were unforeseen or unencountered by the other seven traders."

"According to our experts clearly something major has gone wrong with the management of Emerald's pool and it's their conclusion and their opinion that losses of $64 to $82 per tonne across the various grades of wheat are not normal."

Nathan Draper is confident growers, who in some cases claim they have lost tens and in some cases hundreds of thousands of dollars, can expect to get that money back through this class action.

"My advice to all farmers is from their (Emerald's) actions it's quite clear the nature of the beast we're dealing with and we should expect nothing to simply be gained out of this and that we're going to be put to the fight and in those circumstances we should expect Emerald to take the matter all the way to court and in any event that's what we're preparing the farmers for and that's what we're prepared for."

An Emerald Grain Spokesperson said, "We are very concerned about over-simplistic comparisons of pool results. There are many different components to the pool finalisation and growers should be wary of over-simplistic conclusions that might be misleading. We don’t believe there is a case for a class action and we suggest that growers seek their own independent legal advice before committing money to this cause.”

Topics: rural, agribusiness, agricultural-marketing, agricultural-crops, grain, perth-6000

First posted August 12, 2013 17:35:31