Grain handler wants changes to bring equal footing to competitors
Grain handler Viterra is pushing for regulation changes, to ensure it can operate on an equal footing to its competitors.
SA Business
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South Australian grain handler Viterra says regulations it presently operates under are adding unnecessary costs to its business and putting it on an unequal footing with competitors.
Following the removal of Australia’s single-desk marketing system for wheat sales, the Port Terminal Access (Bulk Wheat) Code of Conduct was brought in by the Federal Government, regulating bulk wheat port terminal operators, to ensure exporters had fair and access to terminal facilities.
But of the 26 operational bulk wheat port terminals in Australia, only nine are not exempt from the code, including six of Viterra’s ports in South Australia. These ports are located at Inner Harbour and Outer Harbor at Port Adelaide, Wallaroo and Port Giles on the Yorke Peninsula and Port Lincoln and Thevenard on the Eyre Peninsula.
Viterra is the only bulk grain export operator in Australia that is regulated under the code for all its port terminals.
Viterra has made a written application to the Australian Competition and Consumer Commission seeking exemption.
The ACCC has now released an issues paper for public consultation on the issue.
Regional director Tim Krause said the present regulations added significant costs to the company, and made it harder for Viterra to react quickly to customer requests.
He said the regulations had a flow-on effect of making it more difficult for exporters to do business in South Australia, which results in less competition for SA growers’ grain.
“An exemption would offer greater certainty for customers and the business going forward,” he said.
While the code was brought in to ensure fair access for exporters, Mr Krause said if Viterra’s fees or terms of access were unreasonable, grain traders would simply source grain from either regions outside of South Australia or use alternative terminals within South Australia.
These alternative options are growing, and are set to widen in the future.
T-Ports will be operating out of its new port terminal facility at Lucky Bay for the first time this season. The company anticipates that exports through the Lucky Bay facility would be at least 600,000 tonnes a year — which would account for more than a quarter of the grain produced on the Eyre Peninsula. The ACCC has stated that it intends to determine T-Ports to be an exempt service provider at its port terminal facility at Lucky Bay.
Likewise, competition is also coming from Semaphore and LINX Cargo, which exported 20 per cent of the grain going through Port Adelaide in the past two seasons.
Another new competitor in this upcoming harvest is ADM, which has set up a storage and handling facility at Port Pirie.
Further competition could come from Free Eyre, which is proposing a new deep water port facility capable of loading huge Panamax-sized vessels at Port Spencer, which it hopes will be operational by next year’s 2020-21 harvest.
Iron Road, Emerald Grain and Eyre Peninsula Co-operative Bulk Handling have also put forward another proposal for a new deep-sea multi-user part of Cape Hardy on the Eyre Peninsula.
Viterra also competes with 11 alternative providers of up-country storage facilities.
Mr Krause said with the code intended as a transitional arrangement as the industry moved on from the single-desk to deregulation, and many changes occurring within the industry to ensure open access, the regulations placed on Viterra were no longer needed.
He said the company was incentivised to provide non-discriminatory access to encourage maximum throughput of its facilities.
“Viterra is a volume-based business, and one that invests $40 million a year in its supply chain,” he said.
Mr Krause said it was particularly important Viterra was able to do business on an equal footing with other companies, due to the increasing competitive pressure that was coming from areas such as the Black Sea.