❓ Mr. Wyatt questions the Potato Marketing Corporation's (PMC) economic modelling practices regarding potato supply, pricing, and efficiency. The Minister's response defends the PMC's current forecasting methods and explains why certain analyses haven't been conducted, citing legislative constraints and commercial sensitivity.
AnsweredQoN 3619Legislative Assembly
QuestionView source ↗
I refer the Potato Marketing Corporation's (PMC) role in ensuring an adequate year-round supply of ware potatoes at a reasonable price to consumers that also provides a reasonable opportunity for a profit by an economically efficient provider, and I ask: (a) does the PMC conduct regularly economic modelling in order to forecast expected consumer demand for ware potatoes over any given time frame: (i) if not why not; and (ii) if yes, please provide the most modelling and the underlying assumptions that underpin these forecasts; (b) has the PMC ever modelled the impact on potato prices in the event that the Corporation is abolished, as has been done in every other Australian state: (i) if so, has this analysis been independently verified and when; (ii) please provide this analysis including all of the underlying assumptions that underpinning it and the expected impact from the removal of the PMC; and (iii) if no such analysis or modelling has been undertaken, will the Minister now request an independent analysis of the impact on potato prices for consumers in the event that the Corporation is abolished; and (c) does the PMC regularly undertake any economic modelling and/or analysis to determine the general cost structures and characteristics of an economically efficient potato provider: (i) if not, how does the PMC reasonably expect to understand what constitutes an economically efficient provider; and (ii) if yes, please provide the most recent modelling and/or analysis, including any underlying assumptions that underpin this analysis?
AnswerView source ↗
Answered
24 March 2015
Responded by
Minister representing the Minister for Agriculture and Food
Response time
27 days
(a) (i-ii) The market for ware potatoes in Western Australia is well known and understood by the Potato Marketing Corporation (PMC), which uses a fast moving consumer goods (FMCG) based forecasting approach. This is not a formal economic modelling approach, which is not required given the size and known characteristics of the market. The expense in creating a formal economic model is neither required nor justified.
The PMC FMCG based forecasting approach is based on a comprehensive Sales and Operations Planning (SOP) process that includes consumption data, market research on household purchasing trends, retail forecasts, washpacker forecasts and PMC analysis of this data. Data is sourced from a combination of sources, including independent data from Fresh Logic on sales and market trends, as well as local and interstate price comparisons. The SOP process occurs formally at each Pool and informally on a daily basis when we receive feedback from merchants on the state of the market. Feedback is also directly sought whenever a price review occurs, which is currently on a three weekly cycle.
(b) (i-ii) Under the
Marketing of Potatoes Act 1946
, it is not the role of the PMC to undertake any economic modelling that assumes it no longer exists. Therefore, no such modelling has been undertaken.
(iii) Previous advice to Parliament indicated that potato prices in Western Australia were highly competitive.
(c) (i) The PMC has commissioned the independent consulting firm ACIL Allen to provide analysis to determine the general cost structures and characteristics of an economically efficient potato producer. The first report was produced in 2014 and will be updated annually for the next two years. Prior to the ACIL Allen contract, the PMC received reports from Eric Skipworth and Associates.
(ii) The report has been provided to the Minister and forms part of the PMC's price recommendations to the Minister. To that extent, it is a commercially sensitive document not for general release.
The PMC FMCG based forecasting approach is based on a comprehensive Sales and Operations Planning (SOP) process that includes consumption data, market research on household purchasing trends, retail forecasts, washpacker forecasts and PMC analysis of this data. Data is sourced from a combination of sources, including independent data from Fresh Logic on sales and market trends, as well as local and interstate price comparisons. The SOP process occurs formally at each Pool and informally on a daily basis when we receive feedback from merchants on the state of the market. Feedback is also directly sought whenever a price review occurs, which is currently on a three weekly cycle.
(b) (i-ii) Under the
Marketing of Potatoes Act 1946
, it is not the role of the PMC to undertake any economic modelling that assumes it no longer exists. Therefore, no such modelling has been undertaken.
(iii) Previous advice to Parliament indicated that potato prices in Western Australia were highly competitive.
(c) (i) The PMC has commissioned the independent consulting firm ACIL Allen to provide analysis to determine the general cost structures and characteristics of an economically efficient potato producer. The first report was produced in 2014 and will be updated annually for the next two years. Prior to the ACIL Allen contract, the PMC received reports from Eric Skipworth and Associates.
(ii) The report has been provided to the Minister and forms part of the PMC's price recommendations to the Minister. To that extent, it is a commercially sensitive document not for general release.
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