CANBERRA: The Australian Competition and Consumer Commission has rejected a proposal by Viterra to introduce long term port agreements with grain exporters.
In a draft decision, the ACCC said they are concerned that features of the agreement would “favour their own trading arm”, Glencore, which owns Viterra Australian operations.
The competition watchdog said they were concerned the proposal would give Viterra to much discretion when allocating port loading slots during peak periods.
ACCC commissioner, Cristina Cifuentis, said grain exporters want to see long term agreements go ahead, but more details will have to be worked out to ensure fair access to the ports.
“Viterra also have an incentive in this to favour their own trading arm Glencore and that reflects a number of factors that historically Glencore has been the biggest exporter and the way the protocols work with this proposed long term capacity agreement, that will continue to be the case,” she said.
“So there is some concern there that their own trading arm will get preferential treatment when it comes to filling in some of those peak demand spots.”
The door is not closed on a future agreement with the ACCC indicating a preference to regulate long term agreements that can promote genuine competition around the ports.
Exporters have shown support for long term contracts that provide certainty around access to ports during peak periods, compared the current auction system where exporters bid on access for a two week window, during harvest.
“The strong feedback that we got from exporters was that they don’t favour the current auction system, that that’s been a real problem for them and that they do support the idea of a long term agreement such as the type that has been proposed by Viterra,” Ms Cifuentis said.
In a statement to the South Australian Country Hour, Viterra said they “acknowledge the draft decision released by ACCC” and “intend to seek further industry comment on the proposed long term agreements for allocating export capacity at its six bulk grain export terminals in South Australia.”
The company said they are reviewing the detail of the draft decision and will continue to work closely with industry and the ACCC to find an outcome that will benefit South Australian growers and international customers.
There is uncertainty around what system will be in place for the 2015/16 harvest with an agreement between Viterra and the still ACCC possible but unlikely to impact growers until early next year.
Ms Cifuentis said the ACCC will use future submissions they receive from exporters and stakeholders to determine a final decision on the port negotiations.
“This draft decision means that for the next auction period which I believe is coming up in the next two months it obviously won’t be in place so they will have to decide whether to have the auction as they usually would or whether not to have an auction and just leave it all as the first in, first serve basis.”
