Grain growers call for increased regulation

Grain producers in South Australia want the state's Essential Services Commission to monitor access and pricing across the whole supply chain

Grain growers call for increased regulation
Grain growers call for increased regulation

By Anna Game-Lopata | April 10, 2012

Grain Producers South Australia
(GPSA), a body
claiming to represent all grain growers in South Australia,
want the state's Essential Services Commission to monitor access and pricing across the supply chain.

The group was one of seven organisations to make submissions to South Australia's
Essential Services Commission's (ESCOSA) review into whether the current ports pricing and access regimes should continue beyond 30 October 2012 for a further five-year period.

Submissions were received from Flinders Ports, Asciano, Viterra and GPSA among others.

In its submission, GPSA 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.

It also recommends ESCOSA’s powers be increased to enable monitoring of the entire supply chain to allow grain growers more ability to arbitrate with access providers on pricing terms and conditions.

Specifically, GPSA argues the dominant grain handler Viterra, which owns and operates approximately 95 percent of South Australia's storage and all of its port terminal capacity, has been steadily increasing its charges to exporters.

According to the submission, Viterra’s charges increased 94 percent this January from $10.95 per tonne in the 2006/07 season to $21.20 per tonne for the 2011/12 season.

"These fees do not include ‘up country’ fees from Viterra sites, which have increased 37 per cent from $12.82 per tonne in 2006/07 to $17.55 per tonne in 2011/12 for the same shipping month," the submission states.

In addition, deliveries from approved third party bulk handlers are charged additional fees to use the Viterra port system.

"These fees include; port in loading fee ($2.70 per tonne rail $3.90 per tonne road), receival at port service fee ($2.50 per tonne wheat) and shrinkage (0.25 percent wheat) equating to approximately $7.00 per tonne for wheat delivered by road.

"There is no other way of loading bulk vessels in South Australia," the submission states.

"Capital costs to build permanent grain storage on farm range from $100 to more than $200 per tonne.

"Annual facility costs range from $20 to $30 per tonne. This is an additional cost burden to the grower as grain exported by ship is still required to go through the Viterra bulk handling system for loading, where costs ranging from $17 to $20 per tonne are incurred for receival, shrinkage and out turn."

While a limited number of South Australian farmers can deliver direct off farm for delivery to port terminals in Victoria, the GPSA submission says access to these terminals cost $5.50 per tonne for the Australian Bulk Alliance and $9.05 per tonne for GrainCorp.

"The farmer’s property may be located closer to Port Adelaide, however the lower port access prices outweigh the higher freight costs," the submission says.

Total grain production in South Australia for 2011/12 season was 7.936 million tonnes, with a market value of over $2.5 billion, being predominately wheat (4.445 million tonnes) and barley (2.032 million tonnes).

Most of this grain is exported in bulk, as there is a limited domestic market for grain (annual domestic wheat consumption in South Australia is approximately 500,000 tonnes).

Grain packing in containers for export is limited by container availability in South Australia and is only available to grain growers in the catchment zone of Port Adelaide.

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