World Grain - February 2016 - 43

FEATURE: EXCESS PORT CAPACITY AT NEWCASTLE

EXCESS AMBITION?
Australian efforts to deregulate its
grain industry, especially in relation
to wheat exports, have been an evolving process. Port access for growers
and exporters has been a fundamental
part of efforts to make Australian agriculture more competitive in global
markets.
In 2014, as reported in World Grain,
a new port access code was introduced designed to better support the
supply chain of wheat by enabling
exports of bulk wheat to access port
terminal services on a fair and transparent basis, while also reducing the
regulatory burden on port terminal operators. The code of conduct - which
is monitored and enforced by the
Australian Competition and Consumer
Commission (ACCC) - works with
existing competition law to ensure
third-party access to critical port infrastructure. Although most stakeholders welcomed the reforms, some
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discourage new market entrants from
building new capacity which is not,
currently at least, required.
Peter Woods, a key player in the
reform of the Australian wheat indus-

try as the former CEO of the federal
government regulator Wheat Exports
Australia and now joint founder of
innovative grain marketing start-up
AvantAgri, has been a long-time critic
of the push to increase competition at
Australia's grain export ports by opening new facilities.
"There was already excess capacity
and the bulk handlers/port terminal
operators had purchased these assets
from state governments with little or
no compensation to growers who had
ultimately paid for them to be built,"
he told World Grain.
Although boosting handling competition was a policy aim due to exporters' frustration at the premiums
they had to pay through auction systems and over the timeliness of their
shipments, Woods said this was now
further exacerbating the problem
of excess terminal capacity both at
Newcastle and in other grain exporting regions of Australia.
"The ACCC has made some good
decisions in regard to reducing regulations in ports where there is more than
one grain port terminal - for example,
the ports of Kembla and Newcastle,"
he said. "Bunbury is a different example, as Bunge doesn't have exclu-

sive rights to the conveyor and this
provided competition to CBH in that
area and should be a positive for grain
growers."
He also welcomed the ACCC's decision in December to grant Viterra
a green light to introduce long-term
agreements (LTAs) for the allocation of port capacity at its six South
Australian bulk wheat ports. This
replaces Viterra's previous auction
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with a negotiation-based framework
using LTAs as the primary allocation
method.
However, Woods said his view was
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capacity allocation and competition
monitoring system put in place under
Australian competition law. "You just
need to look at the shipping stems to
see that terminals are not operating to
full capacity," he added.
Michael King, a freelance journalist and editor,
has been writing about shipping, transport and
commodities for more than a decade. Currently
based in Indonesia, he can be reached at:
Michael@borderline.eu.com.
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inquiries to worldgrain@sosland.com. For reprints of
WG articles, e-mail reprints@sosland.com.

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