GrainCorp business change sparks NSW Farmers’ concerns

Grain Central, September 5, 2017

NSW FARMERS is seeking assurances from GrainCorp that its natural monopoly does not become anti-competitive following its announcement last week that it would join its marketing and storage and logistics operations into a single unit.

In a statement, NSW Farmers’ grains committee chair, Rebecca Reardon, said the creation of the new unit had put GrainCorp marketing into a very powerful position.

“GrainCorp marketing 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 into their competitors’ coverage and positions,” she said.

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

“We’re calling on the consumer watchdog, the Australian Competition and Consumer Commission, to keep a watching brief on potential implications for growers and other grain buyers.”

The Wheat Industry Advisory Taskforce in 2013 recommended total stock reporting by port zone by grade.

This led to the Federal Government appointing the Australian Grains Export Innovation Centre to lead a project which looked at ways to provide greater aggregated stocks transparency and address market asymmetry.

GrainCorp was one of Australia’s leading bulk handlers which refused to participate.

“It makes the case for reporting of aggregated stock information by zone by grade even more important to ensure a level playing field and greater competition,” Mrs Reardon said.

“NSW Farmers agrees that processors want to know specific grain-functional characteristics, but if GrainCorp is serious about this concern, they would make available total stocks by site and the average quality characteristics.

“This would ensure farmers are paid for a premium with receival sites taking higher quality grain which would send the correct market signals.”

Source: NSW Farmers


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