Inquiry examines farmgate impacts

04 Feb, 2015 01:00 AM
There are going to be negative consequences of this CBH exemption, there’s no doubt about that

GRAINS industry heavyweights will appear before a federal Senate inquiry in Canberra this week, which is investigating how grain logistic network operations impact grower returns.

Political momentum is also building around a controversial disallowance motion that could see CBH stripped of the exemption co-operatives were granted in the new port access code last year.

CBH chief executive officer Dr Andy Crane will face questioning about the co-op’s support for the exemption, which was approved by Agriculture Minister Barnaby Joyce, along with WAFarmers grains section president Kim Simpson.

Their evidence is expected to contrast sharply with that of WA Pastoralists and Graziers Association’s Western Grain Growers committee chair John Snooke, who heavily criticised the CBH exemption when the regulations were finalised last September.

The Senate Rural and Regional Affairs and Transport References Committee inquiry was established in mid-2014 with an original reporting deadline of December 2014, which was extended out to June 4 this year.

The inquiry was re-adopted for pursuit by the current parliament in late 2013, following a similar long-running investigation by the Committee into grain handling ownership arrangements.

That inquiry played a key role in raising issues of concern to growers around reduced competition at ports during the proposed $3.4 billion takeover of GrainCorp by US multinational Archer Daniels Midland. The bid was rejected by Treasurer Joe Hockey in late 2013.

Market distortion a major issue

The broad terms of reference underpinning the Committee inquiry’s latest iteration includes looking at on-farm and off-farm grain storage networks and how the movement of grain to ports impacts farmgate returns.

Australian Competition and Consumer Commission (ACCC) chair Rod Sims and other ACCC officials have also been called to give evidence, along with Bunge Limited general manager Chris Aucote.

Bunge has set up competition to CBH at the Bunbury port and is likely to be vigorously quizzed about its views on the co-ops exemption in the port access code of conduct at Thursday’s hearing.

After the code of conduct was finalised, Mr Snooke said its power structures had effectively been reversed, with CBH given an exemption in the Western Australian market where one company exerted the most monopolistic control.

“It’s about the market distortion this creates,” he said, warning the exemption would reduce competition in WA where CBH dominates at four key ports in Kwinana, Geraldton, Albany, and Esperance and 95 per cent of the annual crop is exported.

“If you were going to have a code anywhere, it would be over the WA market and not the east coast which has more competition,” Mr Snooke said.

“There are going to be negative consequences of this CBH exemption, there’s no doubt about that.”

At the time Mr Simpson said his group would have preferred to see a repeal of the Wheat Exporting Act 2008 but its second preference was the co-op exemption as it would reduce supply chain costs.

In a statement, CBH said it wasn’t exempt from the entire code but it appeared likely it would qualify for exemptions from certain parts of the code.

A CBH spokesperson said that in effect, the exemption would reduce the cost of regulation and put the co-op on the same level of regulation as the multinational company it currently works alongside in WA.

NSW Liberal Democratic Party Senator David Leyonhjelm introduced the disallowance motion late last year which is due to be voted on some time after parliament resumes on February.

NSW Liberal Senator and Committee co-chair Bill Heffernan said all sides of the argument over the disallowance motion would be given an opportunity to have their say, at Thursday’s hearing.

Without giving away his position on the disallowance motion, Senator Heffernan – a grain grower at Junee in NSW – said the profits derived from the operations of a co-op like CBH went into growers’ pockets.

Ag levies examined

The Committee will also hold three hearings on Tuesday, Wednesday and Thursday on its inquiry into agricultural sector levies, due to report by June 30.

Senator Heffernan said all of this week’s hearings would give all participants the opportunity to “air their grievances” on key issues, such as the governance of levy marketing and research and development organisations.

Tuesday’s all-day hearing of the Senate levy inquiry saw a range of witnesses appear, including: the Agricultural Institute of Australia; Australian Egg Corporation; Mushroom Growers' Association; Cotton Australia; NSW Farmers president Fiona Simson, and the Australian Meat Processor Corporation.

Wednesday in Melbourne will see appearances from: Ausveg; Victorian Farmers Federation vice-president David Jochinke; Dairy Australia Limited, and Horticulture Innovation Australia Limited.

A half day hearing in Canberra on Thursday, followed by the grain logistics inquiry, will see appearances from: the National Farmers' Federation; WoolProducers Australia; Grain Growers Limited; Australian Wool Innovation ; Australian Farm Institute executive director Mick Keogh; and the Winemakers Federation of Australia and Wine Grape Growers Association.

Colin Bettles

Colin Bettles

is the national political writer for Fairfax Agricultural Media
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4/02/2015 4:59:46 PM

When are people going to wake up to the fact that they cannot just rip away the legitimate equity and assets of established infrastructure businesses by changing the rules retrospectively to pander to the minority, selfish and myopic radicals.


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