Western Australia’s potato war heats up as marketing body takes on tycoon

Western Australia’s potato war, which has been heating up since vegetable tycoon Tony Galati gave away 200 tonnes of excess potatoes to customers in January, is headed to the supreme court.

The Potato Marketing Corporation of Western Australia has announced plans to take legal action against Galati, who owns a chain of grocery stores called the Spudshed as well as being one of the state’s largest growers, for allegedly breaching a 2013 commercial agreement in which he consented to grow only an agreed upon number of potatoes.

In an interview with ABC rural on Wednesday, Peter Evans, the chief executive of the Potato Marketing Corporation, alleged the corporation had “survey evidence” that Galati had planted more potatoes than he was supposed to and he said the resulting oversupply was hurting other growers.

“In effect he has distorted the market for potatoes and affected price and therefore returns for other growers so that’s the fundamental issue,” he said.

Evans said the corporation had a commercial agreement with Galati that outlined how many potatoes he could grow, which he said was based on Galati’s requirements.

“We have then survey evidence about, if you like, the area he has planted and there is a significant difference,” Evans said.

He suggested that most of the potatoes given away by Galati in January were from “overplanting”. The giveaway angered other potato growers who said the tightly-controlled market took a hit from the sudden influx of free spuds.

Evans said the 2013 agreement was struck in an attempt to end hostilities between the corporation and Galati. It apparently hasn’t worked.

“I think it’s widely known that Mr Galati is not a supporter of regulation,” Evans said.

The legal action is the latest in an escalating series of dramas in the WA potato industry this year. First, in January, Galati declared he was giving away 200 tonnes of potatoes that he was prevented from selling because they put him over his 6000-tonne-a-year crop cap.

Then, in March, the Potato Marketing Corporation took a complaint to the WA Corruption and Crime Commission, accusing its chief operating officer of gross misconduct for allegedly working from within to move the industry toward deregulation and even, according to the West Australian, allegedly canvassing options including growers entering into a collective with Galati Group.

An article in the Australian in January, which referred to Galati as a “rebel grower”, said the potato magnate “effectively dared” the corporation to take him to court.

“We’ll fight them,” he told the Australian. “I’ve been fighting them for 20 years now — I want a free market.”

Western Australia is the only state in Australia that still has a regulated potato market. The legislation establishing the Potato Marketing Corporation was introduced after the Second World War and prevents anyone from being able to sell potatoes for human consumption without a licence.

It also gives the corporation power to stop and search vehicles suspected of carrying more than 50kg of potatoes, seize potatoes as evidence and prosecute growers.

A report of the Economic Regulation Authority in 2013 said while those “arcane powers” had not been used in years, there was nothing preventing their use now. It recommended the regulator be abolished, saying that consumers could save $43m a year if potato prices were left to the free market.

That was also the position taken by the Liberal Democratic senator David Leyonhjelm, who described the state of WA’s potato industry as, “Orwellian, if not Stalinist,” in a 2012 column for Fairfax-owned rural newspaper the Land.

“A decade after the Soviet Union collapsed, confirming the moral and economic failure of socialism, Australian agriculture continues to harbour vestiges of it,” Leyonhjelm wrote.

“Ironically it is the party of Robert Menzies, who in 1951 tried to ban the Communist party, that persists in defending it.”

The Barnett government, which is in power with the support of the National party, has so far stood by the Potato Marketing Corporation. The agriculture minister, Ken Baston, has told parliament that the government would not abolish the regulator before the 2017 election but past that, it was “on notice”. Labor has called for it to be scrapped.