Productivity Commission backs ‘right-to-repair’ competition in farm machinery

Should independent repairers have access to machinery software? Farmers want more competition in the sector. VOTE NOW

Farmers costs are rising as they are forced to use machinery manufacturers’ authorised repairers. Picture: Yuri Kouzmin

Australia’s Productivity Commission has backed farmer calls for greater competition in the $720 million agricultural machinery repair market, where global giants are limiting local competition.

The Commission’s Right to Repair inquiry report, released today, found farm machinery manufacturers “have an incentive to limit third-party access to repair supplies to increase repair prices, because these markets are large relative to the market for new machinery”.

In its submission to the inquiry the National Farmers’ Federation stated agricultural machinery manufacturers “refuse to supply technical information, diagnostic tools and parts to anyone outside their authorised network”, limiting competition.

Others submissions highlighted sophisticated agricultural machinery came with equally sophisticated and complex software contracts, which not only restricted farmers’ rights to repair their tractors, but also forced them to use only authorised repairers.

Victorian Farmers Federation Grains Group president Ashley Fraser said “you have a lot of good mechanics out there, who get bound up, not able to access the software they need to do the job”.

In the meantime Mr Fraser said the farmers’ maintenance and repair costs were on the rise, with the Commission finding the sector’s revenue was growing at 3.7 per cent per annum.

Even mechanics outside the grain belt face problems, with Gippsland Diesel Repairs owner Daniel Fusinato telling the Commission “I am unable to provide farmers the full service they require because I cannot access the diagnostic equipment at a reasonable cost, so machinery with software errors needs to be repaired by authorised dealers”.

“The only way I can repair a machine with electronic error codes is to use manual diagnostic processes which can be very time consuming and increases the costs to farmers for repairs.”

In its submission to the commission the VFF highlighted family farmers had very little bargaining power in negotiations with multinational manufacturers.

“Geographical restrictions can effectively render purchasers of agricultural machinery a captive market when buying certain brands, inhibiting their ability to shop around for better prices or service,” the VFF submitted.

“Indeed, many farmers have provided the VFF with examples where they were directly told by dealers that they were unable to purchase outside their area, or have struggled to get agricultural machinery fixed by a dealer if it wasn’t purchased locally.”

But CNH Industrial Australia, which sells Case IH farm machinery submitted its “preference” was for repairs to be carried out by an authorised dealer, given “the complexity of the product” and that farmers were “in the main very capable of negotiating transactions and understanding their legal rights”.

The NFF reported that some manufacturers were “voiding the machine’s warranty if purchasers conducted repairs themselves or use an independent repairer”.

Similarly, the Australian Small Business and Family Enterprise Ombudsman noted that ‘farmers are usually capable of repairing equipment themselves, but are unable due to warranty conditions that stipulate equipment be repaired by an authorised repairer”.

In a bid to break down barriers to competition the Productivity Commissioners is proposing reforms that would:

FORCE manufacturers to provide independent repairers and consumers with access to repair information, tools and/or spare parts.

CHANGE copyright laws to allow independent repairers to legally access and share repair supplies such as manuals and software diagnostics.

REQUIRE manufacturer warranties to clearly state that if consumers use independent repairers, they will not lose their legal rights to the consumer guarantees, even if the manufacturer ‘voids’ the warranty due to independent repair.

However US machinery giant John Deere Limited Australia-New Zealand managing director Luke Chandler submitted “the markets for the sale of agricultural machinery and after-sales services and

repair in Australia are competitive, and that there are no industry wide issues which would warrant legislative intervention beyond the retention of existing competition and consumer law protections”.

The Commission also highlighted that most agricultural and construction machinery had a 12-month warranty, and only a very minor portion of the market had a warranty beyond 24 months.

Mr Fraser said it made no sense that farmers only had short warranties on agricultural machinery, such as headers that could cost $1 million.

The inquiry was initiated by Federal Treasurer Josh Frydenberg, last October, requesting the Productivity Commission investigate “Right to Repair” reforms due to concerns “premature product obsolescence and a lack of competition in repair markets” for products ranging from mobile phones to farm machinery.

The PC report comes hot on the heels of the Australian Competition and Consumer Commission’s Agricultural machinery market study, which found weak competition in agricultural machinery repair markets “reduces purchaser access to genuine choice, and may result in higher prices charged by authorised repairers, lower levels of customer service, and unnecessary delays in accessing repairs and servicing”.

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