ACCC sees ongoing grain supply chain concerns

Ports and upcountry access ‘fairness and transparency’ questioned

ACCC sees ongoing grain supply chain concerns
From the report's cover


Little has changed in the past year for bulk grain growers and exporters, who continue to raise concerns about the fairness and transparency of access to Australia’s bulk grain export supply chains, Australia’s competition watchdog reports.

The sentiment is near-identical to last year in the latest Australian Competition and Consumer Commission (ACCC) Bulk grain ports monitoring report.

It finds Australia is experiencing its lowest annual grain production since 2007-08 and lowest bulk grain exports since at least 2011-12.

And, while grain exporters could generally access Australian ports during the 2018-19 shipping year, they remained concerned about the fairness and transparency of their access, especially at facilities operated by CBH and Viterra.

Australian bulk grain export port terminal services remain dominated by three port terminal service providers; CBH, Viterra and GrainCorp. Each have export trading arms that compete for port access with third-party exporters.

During the past season CBH and Viterra provided 99 per cent of bulk export services from Western Australia and South Australia, respectively.

Since the 2016-17 shipping year, when grain was last exported in significant quantities from eastern Australia, the three dominant providers have loaded 91 per cent of Australia’s bulk grain exports.

Last year's grain monitoring report is available here


"The level of competition between port terminals varies significantly among different regions. The entry of new service providers has provided competition in some regions, but WA and SA remain serviced by vertically integrated near-monopolies," ACCC commissioner Cristina Cifuentes says.

"Even though many port terminals had excess port capacity this season, exporters and grower groups were still worried about the quality and fairness of port access.

"In particular, they were concerned about their limited ability to negotiate favourable terms with the dominant port operators.

"While some new port terminal service providers have recently entered the market many of them exported very little or nothing at all this season and their ability to compete with and impact the behaviour of dominant providers remains unclear."

The ACCC also continued to hear concerns from growers and exporters about access to upcountry grain storage and handling services.

"In addition to the concerns raised about ports access, some exporters and growers are also still concerned about the terms of upcountry storage and handling agreements and their inability to negotiate non-standard terms of access," Cifuentes adds.

The report also reiterates the ACCC’s support for a range of amendments to the Wheat Ports Code that would improve the Code’s ability to ensure that exporters have fair and transparent access to port terminal services.

These amendments were proposed by the ACCC in December 2017 and May 2018 and supported by the Department of Agriculture’s Code review final report, released in October 2018.

"In particular the ACCC believes that the Code should seek to ensure that exporters have fair and transparent access to services at all times, not only when they are seeking access for the purpose of exporting bulk wheat," Cifuentes says.

"This will encourage exporter participation in markets and increase competition for the grain of Australian growers."

The full report is available here.


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