BULK handlers have warned grower groups lobbying for the release of more market information to be careful what they wish for, saying providing too much stocks information would be a negative for the production sector.
The warning comes as the Code Development Advisory Committee (CDAC), created by government to assist in developing the new mandatory code of conduct for port operators, hands back its recommendations to government.
Farmer groups have been calling for bulk handling networks to release increased information on what grain they have in their network, saying the current system provides an unfair advantage to the marketing arms of the bulk handlers.
Nigel Hart, general manager of storage and logistics at GrainCorp said farmers needed to think carefully about what they wanted the market to have access to.
“It’s not commercially in growers interests to have all the information in terms of how much grain Australia has and what grade it is, it will allow the market to take a position there which would not be good for prices overall,” Mr Hart said.
His comments were backed up by Ultima grower and Grain Trade Australia board member Geoff Nalder.
“If we disclose the info on stocks, the buyers will know more themselves and in a multi-origin accumulation system it might well work against us,” Mr Nalder said.
Mr Hart said the current voluntary system, where GrainCorp provided basic receivals information by port zone over the harvest period was all the market needed.
“People have their own networks, and there’s plenty of brokers and advisers out there to help you get a handle on what is happening,” Mr Hart said.
Under the proposed mandatory code of conduct for port operators and bulk handlers, more information will have to be released.
Mr Hart said GrainCorp’s major gripe with was the fact it would be locked into releasing information, while competitors, such as small bulk handlers or farmers storing grain on-farm would not be subject to the same rules.
“We’d estimate we’d only be taking about 55 per cent of east coast grain, but we would be the only ones reporting.”
He proposed a system where growers registered and all their receivals were linked in.
“Set up a company, called it Grower Storage Information Services or whatever and have all receivals linked in, if you think the information is valuable to you, this would be a way of ensuring growers had access to market info without the trade also taking advantage.”
Grain Producers Australia chairman Andrew Weidemann said principles being developed by the CDAC for port reporting included better real time access to quality data and releases on stocks information by grade, weekly during harvest and monthly during the rest of the year.
“We’ve probably ended up with way more than we needed, but that is what happens when you bring politics into an industry problem,” Mr Weidemann said.
Mr Hart said fears about GrainCorp leveraging its bulk handling and port assets to boost its marketing arm were unfounded.
“We’ve got the take or pay rail deal, so there’s a strong commercial need to get the tonnes through both through the rail network and the ports,” Mr Hart said.
“I clearly disagree with Andrew’s concept that perhaps we shouldn’t be in marketing, we only own about 20pc of the grain in our network, and there’s 50 other buyers buying regularly in our network, so there’s plenty of competition there.”
He said the past two big production years had placed significant stress on the shipping stem, but said in more average years, it would be easier to book port spots.
“At around five million tonnes of exports out of the east coast, which we think is more representative of a normal year, there will be plenty of space in our port networks, not to mention competition from other port terminals, such as the Port of Melbourne or the new facilities in Newcastle and Brisbane," Mr Hart said.
“We’ve been hearing about decreasing competition due to industry consolidation, but I believe there is still very healthy competition.”
Mr Hart said rather than worrying about port capacity, the industry needed to invest more in the supply chain.
He said GrainCorp had been decisive in terms of investing in capital-intensive heavy assets such as train sets.
“Many companies are happy being asset light and trade capacity on a spot basis, relying on others to have the capital risk, which is fine, but there has to be some trade off," he said.
“We’ve invested in our 300 sites and between 14 and 20 trains, it’s a big investment and there needs to be some advantages.
“Other companies can get access to our network, but it's our investment and we don’t think they should get all the advantages we do.”
Rob Nelson, of the Clear Grain Exchange, questioned whether investment in ports by traders such as Glencore and Olam, when there is generally adequately capacity in existing facilities, marked a changing dynamic in the Australian industry.
Mr Hart said it was due to the business models they were used to.
“Australia is a unique market in that it is the only major exporter that has an open access system," he said.
“Most countries have proprietary supply chains where the exporter operates a closed loop system.”