Growers wary of GrainCorp changes

Proposed GrainCorp restructure leads to calls from farmer groups for mandatory stocks reporting


Agribusiness
Wayne Newton, AgForce grains president, says the GrainCorp restructure highlights the need for mandatory stocks reporting.

Wayne Newton, AgForce grains president, says the GrainCorp restructure highlights the need for mandatory stocks reporting.

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Too powerful? Grower groups claim GrainCorp's restructure gives the company an inside run in terms of stocks information.

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PROPOSED structural change at GrainCorp have been met with concern from state farming organisations, worried at potential market distortions as a result of the adjustment.

GrainCorp announced at the end of August it was changing its structure through the creation of a single grains business unit set up via a merger of the company’s existing storage and logistics and marketing businesses

In Queensland, AgForce grains president Wayne Newton said while his organisation wanted to see a vibrant and secure GrainCorp business he was worried the restructure would create an artificial advantage for the company over its competition in the marketing space.

"The GrainCorp restructure puts the company's marketing function in a very powerful position with visibility of all their competitors' grain stored in the bulk handling system, and highlights why we urgently need a more open, transparent grain stocks reporting system to level the playing field," he said.

For its part, GrainCorp said the processes regarding external buyers would not change.

“GrainCorp is simply streamlining our customer interface and processes,” a company spokesman said. 

“There is no change to our existing policy that external traders’ confidential information is not provided to our traders,” he said.

But NSW Farmers grains committee chair Rebecca Reardon had similar concerns to Mr Newton.

“Graincorp market will have line of sight to all their competitors’ grain stored in the bulk handling system - stocks, grades and export schedules- giving them a large advantage via insight into their competitors’ coverage and positions,” Ms Reardon said.

“Furthermore, they will have enormous ability and incentive to influence their competitors’ grain execution and to arbitrage stocks as they choose.”

“We want to make sure the changes do not lead to anti-competitive behavior.”

Mr Newton said the tremendous advantage GrainCorp would have in terms of market information made it even more pressing that the Federal Government made progress on a mandatory stocks reporting scheme.

“We want to see something that comes out monthly by grade by port zone,” he said.

“It needs to be something where the bulk handlers are required to release the information – a pilot voluntary scheme was trialed but it failed,” he said.

Mr Newton disputed claims from some within the industry that growers would actually be worse off with wider stocks information available as buyers would have a clearer handle on grain reserves.

“We just want transparency and openness, we don’t want the volatility that comes when everyone is trying to guess how much grain is out there, just mechanisms that lead to a fair price for our product.”

He said stocks reporting schemes were working well in other nations, such as the US.

Both Mr Newton and Ms Reardon urged the Australian Competition and Consumer Commission (ACCC) to monitor the GrainCorp restructure to see that it is not creating a market distortion in terms of stocks information or port access.

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