Forty million good reasons for a good port access code

More than $40 million per annum could flow back into the hands of Australian farmers if the Federal Government’s newly drafted port access code can bring greater competition to the grains market, NSW Farmers said today.
 

Australia’s largest state-based farming organisation said that every dollar created for the price of grain by strong competition created by the export grain sector would put the $40 million dollars back into the hands of farmers as opposed to the bulk handlers.
 
NSW Farmers comments followed the release of the draft code for public consultation by Minister Joyce after it was recognised that strong and enforceable contestability in Australia’s grain supply chain infrastructure was needed to protect farmers from the market power of grain bulk handlers.
 
The association’s grains spokesperson Dan Cooper said: “If Australia is serious about improving the competitiveness and profitability of its grain farming sector then strong competition for farmers’ grain is a must.”
 
“In the grain market ensuring contestability within incumbent regional bulk handlers’ network is crucial to ensuring the competition that returns a market value to farmers for their grain,” he said.
 
“To put it simply, if other grain exporters are unable to have a level playing field in using these assets they are not in a position to compete in the market to accumulate farmers’ grain.
 
“Our figure is just the tip of the iceberg because discussions we have held with different segments of the market indicate a lack of contestability within these networks is costing farmers upwards of $10 tonne.
 
“Any value that doesn’t flow through to a farmer as a result of true competition is pocketed as profit by the bulk handler as a result of their market power,” he concluded.
 
NSW Farmers is currently scrutinising the draft code to ensure it will bring the benefits of competition to the farm gate. It is working with other farmer groups to develop a strong position in response to it.
 
Key to effectiveness of the code will be the ability of farmers to oversee the implementation and enforcement processes of the code including bringing complaints for resolution. At the moment, farmers have no rights to seek true contestability in the grains supply chain despite the fact that these costs are passed down to them in the form of lower farm gate prices.
 
The ANZ report Greener Pastures identifies the strong concentration of supply chains in the grains market as a failure that will constrain the ability of Australian agriculture to grasp the opportunities of growing world food demand. According to its authors, increased contestability is essential to ensuring that these markets work for the benefit of farmers.

ends

4 June 2014 

 

 

Contact: Justin Crosby

Phone: 1300 794 000

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