Australia’s competition watchdog agrees to give grain handler Viterra more time to develop a wheat capacity allocation system in South Australia
By Anna Game-Lopata | May 11, 2012
Australia’s competition watchdog has agreed to give grain handler Viterra more time to develop a wheat capacity allocation system in South Australia.
The Australian Competition and Consumer Commission (ACCC) decided to intervene in the process in April, following concerns about port terminal access for bulk wheat export expressed by wheat growers in the state and problems auctioning wheat capacity in Western Australia.
As a result, the ACCC says it requires Viterra to undertake further industry consultation and change
its original access undertaking accordingly.
The original timeframe of May 2012 to introduce an auction system in South Australia will be extended to November 2012.
The ACCC raised concerns about
Viterra’s proposed system
following calls from the Grain Producers of South Australia (GPSA) for the state’s Essential Services Commission (ESCOSA) to monitor access and pricing across the whole wheat export supply chain.
The GPSA submission was one of seven made to ESCOSA’s review into whether the current port pricing and access regimes in South Australia should be continued for a further five-years.
In its submission, GPSA, which claims to represent all South Australia’s grain producers, calls on the government to prevent “vertically integrated access providers” setting terms and conditions that “discriminate in favour of their downstream operations” and to provide incentives to reduce costs and improve productivity.
Viterra, which currently owns and operates approximately 95 percent of South Australia’s storage and all of its port terminal capacity, recently provided the ACCC with an undertaking including the proposed auction system to allocate port terminal capacity
to competing exporters.
In addition, the ACCC observed problems highlighted by similar auction systems in Western Australia, leading to a decision to
have
Viterra modify its
original undertaking.
The company then applied for more time to readdress the issues.
ACCC chairman Rod Sims says the extended timeframe will provide Viterra and the industry with the opportunity to thoroughly consider and address complex problems that may have arisen with the proposed auction system.
“The South Australian wheat industry needs time to develop an auction system in order to avoid the inefficient outcomes experienced in WA,” he says.
“The introduction of an effective auction system will promote competition across the South Australian wheat industry to the benefit of Australian wheat farmers.”
The variations to the access undertaking provide that in the event that an auction system is not ready by August, Viterra will accept bookings on a first-in, first served basis for shipping capacity between 1 October 2012 and 31 January 2013.
The variation allows for an auction to be held in November for shipping capacity from 1 February 2013, unless further extended by agreement.