Australia's grain export woes continue

Many grain exporters in Australia are opposing further deregulation that would do away with compulsory port access arrangements.

 

Handing down its findings in October, the Australian Competition and Consumer Commission (ACCC) said it was confident all port operators had agreements in place which assured the prohibition of anti-competitive behaviour, had improved transparency and had a clearly defined set of terms and conditions.

 

However, the message from industry insiders is of a deeply dysfunctional system in which the bulk handlers have restricted access to port facilities.

 

Further increasing anxiety are the recently released Productivity Commission (PC) recommendations to do away with the port access test, which applies if an exporter, or an associated entity of an exporter, is the provider of one or more port terminal services, and was designed to prevent the formation of regional monopolies by big grain companies which also own port facilities.

 

Under the current rules, to gain export approval, the company must satisfy Wheat Exports Australia criteria, but the PC is advocating the test be phased out by 2014.

 

However, the Australian Grain Exporters Association, (AGEA), of which Viterra is a member, has put in a response to the PC draft report, calling for the regulations to remain in place.

 

It is a change of tack from the normally pro-deregulation group, but the group said it thought removing the port access test would be detrimental to the grains industry as a whole.

 

''While, in general, AGEA supports the recommendation to reduce regulation, it does not believe the PC has recognised the substantial issues that still remain in relation to port access and the likely impact of taking the industry backwards if its recommendations are implemented in full,'' the group wrote in its response.

 

It said the difference between the intent of the agreements and their implementation in practice was already apparent. "There are already examples that suggest the bulk handling company behaviour and outcomes of the access undertakings are not fully aligned."

 

A recommendation by the PC to move jurisdiction for port access under the auspices of the Trade Practices Act has also met with resistance.

 

The AGEA said shifting the access test to the Trade Practices Act would effectively change the access test from applying to total capacity held by bulk handlers to spare capacity.

 

It said such a move would allow bulk handling companies to control the supply of capacity available to exporters other than their own trading arms, with the inevitable consequence of increasing the price of capacity.