Watchdog keeps eye on grain surcharges

11 Jan, 2017 02:00 AM
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THE removal of a grain handling surcharge by GrainCorp in the Eastern States has ended an Australian Competition and Consumer Commission (ACCC) investigation of it.

The ACCC launched an investigation in early 2016 into a $2.50 a tonne surcharge imposed by GrainCorp Operations Ltd on some exporting customers after Quattro Ports, a terminal operator competitor at Port Kembla, New South Wales, alerted it to the surcharge.

According to the ACCC, GrainCorp added the surcharge to customers for outloading grain delivered by rail from its upcountry storage and handling facilities to rival port terminals.

GrainCorp, the largest grain accumulator with the biggest storage, transport and handling network in eastern Australia, owns seven of the 10 bulk grain elevators operating at Eastern States' ports.

At the end of 2015 Quattro opened its own grain terminal at Port Kembla in direct competition to the GrainCorp terminal there.

The issue of the surcharge was raised by Quattro, the ACCC said during public consultation early in the year for its Wheat Ports Code exemption assessment.

The code, administered by the ACCC, regulates bulk wheat port terminal operators to ensure exporters have fair and transparent access to terminal facilities.

As part of its role the ACCC can grant periodic exemptions from sections of the code to enable operators at specific ports to offer streamlined access to terminal services.

In April, after its assessment, the ACCC declared both GrainCorp and Quattro as exempt service providers at Port Kembla, making them subject to a lower level of regulation.

While GrainCorp's upcountry fees were not covered by the Wheat Ports Code, the ACCC said it launched the investigation because of concerns the surcharge increased the cost of sending grain to wheat ports operated by Graincorp's rivals and was anti-competitive.

Given the scale of GrainCorp's operations, it was concerned the surcharge could affect competition along grain supply chains, particularly at a time when new entrants are establishing their facilities at Port Kembla and Newcastle, the ACCC said.

GrainCorp dropped the surcharge from October 1 but the ACCC investigation continued until just before Christmas.

"The ACCC notes GrainCorp's decision to remove the surcharge, and therefore does not intend to investigate this issue further," ACCC Commissioner Mick Keogh said.

"Discriminatory practices by large, vertically-integrated organisations have the potential to distort competition in supply chains.

"The ACCC will continue to monitor the actions of major players in the grains industry, and throughout the agriculture sector, for possible anti-competitive conduct in agricultural supply chains," he said.

The ACCC has been provided with $11.4 million additional funding over four years and has established an agriculture unit to conduct investigations of agricultural supply chains and engage with people in rural and regional areas.

Earlier in 2016 GrainCorp pledged $300 million to back Australian Grains Champion's failed bid to corporatise CBH Group.

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FarmWeekly
Mal Gill

Mal Gill

is wool and dairy writer for Farm Weekly

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