The status quo is on its way out as an option for Canada’s biggest grain handler, in how it will be allowed to manage access to its South Australian port terminals.
The Australian Competition and Consumer Commission (ACCC) recently issued a draft decision that endorses a new auction model for accredited Australian wheat exporters who want to ship wheat out of the country through Viterra’s terminals.
Viterra’s original proposal — which called for the “first come, first served” model now used to allocate shipping slots to continue — was rejected at the ACCC as “not appropriate.” Following the commission’s advice, the company came back to the table with the auction model.
“The ACCC was concerned that current practices result in outcomes that do not benefit Australian wheat growers nor the Australian economy,” commission chairman Rod Sims said in an Aug. 11 release.
Problems with the status quo were “apparent in bookings for the peak shipping period of January to April 2012,” the commission said.
“With a large harvest anticipated, exporters seeking to access the port terminals to export would find that all available capacity would be allocated to only two exporters at Viterra’s deep sea terminals during the peak shipping period.”
Such a system would affect competition in the wheat market, “possibly resulting in lower prices for wheat growers,” the commission said.
Access undertakings have been set up since 2008 as part of the deregulation of Australia’s wheat industry. Such undertakings are meant to make sure third-party exporters can ship their wheat through port terminals run by vertically-integrated operators, thus ensuring competition in the export of bulk wheat.
The revised draft undertaking Viterra brought back calls for an auction system to be set up to start operating in May next year.
“To increase competition before then, Viterra will also make slots available for other exporters for January to April 2012 at the deep sea terminals at Port Lincoln and Port Adelaide Outer Harbour,” the commission noted.
“The proposed new auction system will increase competition and lead to a better outcome for exporters and growers alike,” ACCC’s Sims said.
The proposed new system and the ACCC’s draft decision are now open to public comment until the end of this month.
Viterra, in a separate release, said it “remains confident” it will meet the commission’s requirements for a new access undertaking by Sept. 30, and get renewal of its bulk wheat export accreditation from Wheat Exports Australia, starting Oct. 1.
The ACCC approved Viterra’s first access undertaking for its Australian ports when the company took over ABB Grain in 2009. ABB’s port operations arm, AusBulk Grain, had drafted that first undertaking.