November 1, 2010

GrainCorp welcomes release of productivity commission report

GrainCorp has welcomed the release of the Productivity Commission Inquiry into Wheat Export Marketing Arrangements, and endorsed the majority of the recommendations in the report.

GrainCorp CEO Alison Watkins said, "GrainCorp agrees with the majority of the Commission's findings, but differs on the need for continuing regulation of port elevators, and the need for regulation to continue post September 30, 2014."

"If the regulation of access to port elevators is to continue, for the sake of certainty, transparency, and fairness, all grain export infrastructure should be regulated in the same manner. It seems anomalous to have some infrastructure regulated, and other infrastructure that does exactly the same thing, not regulated," Watkins said.

Watkins called upon the Commonwealth Government, Wheat Exports Australia and the ACCC to take immediate steps to ensure that Melbourne Port Terminal, and any other grain elevation capacity established in Australia while the current regulation is in place, be subject to an access undertaking overseen by the ACCC that is comparable to those currently in place for GrainCorp, CBH and Viterra.

GrainCorp noted that the Commission had found that the transition of the industry from the bulk wheat export monopoly, to a less regulated system with multiple bulk wheat exporters, has been both smooth and successful.

"Our experience in eastern Australia is that growers adapted very readily to the changes in the market. In some regards, growers adapted more quickly than many grain traders or exporters, a number of whom took some time to come to terms with the complexities of grain storage and transportation for export cargo accumulation."

Watkins said, "Over the last two seasons, the grain supply chain in eastern Australia has worked more efficiently than it did when the monopoly was in place. GrainCorp is moving grain more efficiently on rail, and the efficiency of vessel loading management across our port elevator network has also increased."

"GrainCorp has also found significant unfulfilled demand in the international market for Australian wheat. Many new buyers are now seeking supply from Australia. This is a good thing for growers and the industry as a whole."
 

GrainCorp believes that the challenge now facing the industry is to continue the reform process and to implement recommendations from the Productivity Commission report.

"The process of reform needs to continue if the Australian grains industry is to capture efficiencies and become more competitive."

"To further the reform process, GrainCorp is calling on the Commonwealth Government to immediately convene a roundtable of accredited bulk wheat exporters to advise the Minister on implementation of the reforms proposed by the Commission," Watkins said. "This process should report back to the Minister by the end of March 2011. GrainCorp believes this will be the most effective way of delivering a tangible outcome from the good work done by the Commission during this very thorough and insightful inquiry."