Port exemption application

Viterra has released a podcast that explores how South Australian growers are being disadvantaged by the current application of the Port Terminal Access (Bulk Wheat) Code of Conduct (“the Code”) and the benefits that would flow to growers with exemption.

Reducing the regulation through exemption would be beneficial for South Australian growers as it would:

• reduce the regulatory burden and cost
• create a level playing field with other ports in Australia
• make it easier for exporters to do business in South Australia
• allow for greater operational efficiency and flexibility
• support further investment
• collectively help improve the competitiveness of SA grain in the global market.

Podcast: Listen to how the Code impacts the SA grain industry

The podcast examines the significant impact the Code has on growers and the SA grain industry.

Viterra Regional Director Australia and New Zealand Tim Krause is interviewed about why the Code was introduced as a transition from the single desk, how the Code affects South Australian growers and Viterra’s application to the the Australian Competition and Consumer Commission (ACCC) for exemption.

Charles River Associates economist Dr Chris Pleatsikas, an internationally recognised competition economist, speaks about his analysis of the Code and key findings about what an exemption would mean for South Australia.

About our port exemption application

Background

The Port Terminal Access (Bulk Wheat) Code of Conduct (Code) was introduced in 2014 to ensure Australian grain port terminal operators provide fair and open access of their facilities to all grain exporters.

Since the Code was introduced in 2014, the environment has changed significantly and the high level of regulation of the Code is no longer required.

• Many new port terminal operators have entered the market and there is excess port terminal capacity across South Australia and Australia.
• Traditional “catchment zones” for grain grown in South Australia are flexible and outdated concepts.
• The domestic demand for grain in South Australia and Australia has increased significantly.
• Contracting arrangements with exporters have become increasingly sophisticated, with long-term agreements and other mechanisms to manage and share supply chain risks.

The Code, which is administered by the ACCC, has two tiers of regulation, with the majority of Australian port terminal operators exempted from most of the regulatory requirements.

Exempt service providers are ‘exempted’ from having to comply with Parts 3 to 6 of the Code and remain subject to only Parts 1 and 2 of the Code, resulting in a lower level of regulation. It is a significant advantage to be classified as an exempt service provider because of the reduced regulatory burden and cost, and greater efficiency and flexibility.

Viterra is the only port operator in Australia subject to the full requirements of the Code for all of its port terminals. There are 26 operational bulk wheat port terminals in Australia, only nine are subject to the Code’s full requirements, and six of these are Viterra’s SA terminals. This uneven playing field creates burden and costs that are ultimately being borne by SA growers.

Viterra has requested the ACCC exempts its port terminals. Our exemption application is currently being considered by the ACCC.

The benefits of reducing regulation

An independent report undertaken by leading international economics consultancy firm Charles River Associates (CRA) supports the exemption. The report analyses the competitive environment for supply chain and port terminal operators. It also explores the benefits of exemption for growers and all participants in the SA grain industry.

Reducing regulation at Viterra’s port terminals will enable growers to compete on a more even playing field both internationally and domestically. It will reduce costs through improved supply chain efficiencies; and encourage increased investment by industry participants as a result of greater operational certainty.

There will continue to be competing supply chain and port terminal providers and there will continue to be a competitive market for the purchase of grain in SA.

Key findings from the independent report include

• the Code is disproportionately affecting the SA grain industry and the costs of the Code are being borne by growers
• benefits of exemption for growers include reduced supply chain costs leading to higher prices for their grain, further investments in the grain industry and continued competitive purchase of grain
• there are competing port terminals in South Australia and Viterra does not have the market power regularly attributed to it
• there is no commercial incentive for Viterra to stop other exporters using its terminals, it is the opposite
• there has been no market failure that justifies the continued application of the full Code
• the Code is artificially fragmenting the SA grain export market.

View the Charles River Associates Report.