New review could sink wheat port access code

New review could sink wheat port access code


Farm Online News
The CBH Albany grain port - one of four exemptions for the WA bulk handler, in the code.

The CBH Albany grain port - one of four exemptions for the WA bulk handler, in the code.

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IS the mandatory wheat port terminal access code of conduct still necessary or should it be culled, a new review will ask.

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IS the mandatory wheat port terminal access code of conduct still necessary, what impact has the government regulations actually had on the Australian grains industry and can it be improved?

Those are the three central questions underpinning a first-time review of the rules governing whether bulk grain handlers are treated fairly by port operators, at a critical, strategic access point in the grains’ logistics supply chain.

Introduced in September 2014, the mandatory code contains three core elements and was designed and implemented amid some tense disagreement amongst grains groups and political factions about the value of additional red tape, in the liberalised market.

It primarily contains a three-year review rather than a five-year sunset clause; an exemption for individual operators like WA’s dominant farmer-owned co-operative CBH; and growers having a “seat at the table” during dispute arbitration.

A review of the code’s first three years in operation was instigated by Agriculture and Water Resources Minister Barnaby Joyce on August 29 this year and is set to deliver its final recommendations to the minister in about nine months.

His department has formed a taskforce to conduct the examination process and is calling for initial submissions by November 24 - based on the three central questions - while an issues paper has also been released.

It’s anticipated the review will conduct detailed consultation with industry stakeholders like farm representatives and bulk grain handlers.

A draft report is due out in mid-February 2018 and a final version about four months later.

The government’s response to the review recommendations is expected to follow soon after the final report is handed down in June 2018 to try to give industry certainty, heading into the 2018 harvest.

The wheat port code was implemented to protect against monopolistic behaviour and market power abuse in the grains supply chain, in order to completely repeal the Wheat Export Marketing Act, which previously governed the AWB single desk bulk wheat exports marketing system that was removed in 2008.

The review’s terms of reference includes looking at the effect of any changed market conditions in the wheat export supply chain, on the rationale for the code and its operation.

The issues paper asks several key questions including; whether the power to exempt cooperatives should be retained in the code; should the entire code be repealed and if so when; what are the costs and benefits of retaining the regulations; and are there alternative options, including non-regulatory ones, to deliver the same or better outcomes - but at lower cost.

The issues paper also asks whether the port access code has led to any unintended, negative consequences.

In broadening the review’s terms of reference, outside of matters specifically relating to the code’s operation, the process will also investigate the availability and transparency of relevant market information to export supply chain participants.

After the code was first introduced, NSW Liberal Democratic Senator David Leyonhjelm tried unsuccessfully in early 2015 to cull the co-operative exemption contained in the regulations, by raising a disallowance motion in the Upper House.

At the time, CBH argued the exemption - which is available to the minister on a discretionary basis according to assessment of individual ports and bulk handlers - saved the farmer owned co-op about $1 million per year in compliance costs.

During the debate to vote down Senator Leyonhjelm’s disallowance motion - after it was opposed by the Coalition, Labor and the Greens - Opposition Senator Doug Cameron said his party would give the government’s new regulations an opportunity to work.

“But we do issue an appeal – the government has removed the five-year sunset clause for the code – it has been replaced by a review in three years’ time,” he said.

“We urge the minister to provide certainty by reinstating the sunset clause.

“Labor believes that within five years, sufficient competition will exist in all port zones to allow the removal of all regulation, beyond the general provisions of the Competition and Consumer Act.

“Labor believes the government has erred in providing the (Agriculture) Minister the power to exempt certain market participants, but will not stand in the way of its right to be proven wrong, to have done so.”

But speaking about the three-year review process, Grain Producers Australia Chair Andrew Weidemann said he supported retention of the code that’s overseen by the Australian Competition and Consumer Commission (ACCC), in order to maintain checks and balances in the system, in the absence of a more competitive port competition model, with further participants.

Mr Joyce said the code aimed to reduce unnecessary regulatory burden and allowed bulk wheat exporters to “get on with what they do best - getting Australia’s wheat out to the world market - while ensuring there is a level playing field”.

“We would particularly like to hear from farmers and exporters about their experiences accessing port infrastructure since the code came into effect in October 2014, which was a significant step towards a freer and more open wheat export industry,” he said.

“The majority of Australia’s wheat crop is shipped to countries in Asia, Africa and the Middle East, so we need to ensure our port terminals are working as efficiently and effectively as possible for our wheat exporters.”

According to statistics provided by Mr Joyce’s office, Australia exported 22 million tonnes of wheat valued at $6 billion in 2016‒17 with most of it from WA.

To date the ACCC has approved applications for exemption from certain code requirements for 13 wheat export facilities and declined an exemption to one facility and also approved a variation to one approved capacity allocation system.

GrainCorp said the review was in line with requirements of the code when it was introduced and welcomed the opportunity to participate in it.

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