BRISBANE, AUSTRALIA —The Australian Competition and Consumer Commission (ACCC) on Sept. 24 issued Wheat Code exemptions for three Australian port terminal service providers, including WA Chip & Pulp Co Pty Ltd (WAPRES), which plans to start exporting grain for Bunge.
The final determinations were issued for WAPRES at Bunbury, and Queensland Bulk Terminals (QBT) and GrainCorp, at Port of Brisbane. The determinations grant exemptions from Parts 3 to 6 of the Wheat Code.
The Code, which started on Sept. 30, 2014, regulates bulk wheat port terminal service providers to ensure that exporters have fair and transparent access to terminal facilities. Where appropriate, the ACCC may reduce regulation at a specific port terminal by exempting the relevant port terminal service provider from certain provisions of the Code.
WAPRES, which is owned by Marubeni Corp., has contracted with Bunge for the export of bulk grains, including wheat, barley and canola. In 2014, Bunge built a grain storage facility adjacent to the WAPRES terminal. It is connected to the WAPRES ship loader by a belt conveyor.
With respect to other exporters, WAPRES said that due to its limited size and lack of dedicated bulk wheat facilities, export via the Bunbury terminal is unlikely to be a viable option without further significant investment. However, WAPRES said other bulk wheat exporters in Western Australia will benefit from the reduced demand at other port terminals from the operation of the Bunbury terminal.
“The ACCC considers that WAPRES faces sufficient competition at its Bunbury facility to warrant reducing the level of regulation it faces under the Code,” ACCC Commissioner Cristina Cifuentes said.
This exemption follows public consultation by the ACCC on its draft determination to exempt the WAPRES facility. The ACCC received two submissions – from the Australian Grain Exporters Association (AGEA) and Western Australian Farmers Federation. Both supported granting the exemption.
QBT and GrainCorp face sufficient competition to warrant granting both operators exemptions from certain parts of the Code when providing services at Port of Brisbane.
“The ACCC’s analysis also indicates that the two Brisbane terminals have spare export capacity. Given the competition between them, this spare capacity would create incentives for both port operators to provide fair and transparent access to third party customers. Therefore, the full application of the Code is not required.”
In coming to these decisions, the ACCC examined the way in which QBT’s and GrainCorp’s port terminals compete with each other for bulk wheat volumes. The ACCC also considered the level of competition in services across the supply chain, including competition from grain exports via containers.
The ACCC’s assessments found that QBT’s Brisbane facility faces strong and direct competition from GrainCorp’s facility. Similarly, the ACCC considers that GrainCorp’s facility faces competition from QBT, despite QBT’s facility having a lower level of capability. The ACCC also considers that GrainCorp and QBT face significant competitive pressure from containerized grain exports, which represent around 35% of total wheat exports from the Port of Brisbane.
“This exemption means GrainCorp’s Fisherman Islands terminal is subject to a lower level of regulation (Parts 1 and 2 of the Code only),” GrainCorp said in a press release.
The ACCC intends to monitor use of all three bulk wheat port terminal services to continue to assess the level of competition at these facilities into the future. Also exempt service providers are still obliged to deal with exporters in good faith and publish information about how capacity is allocated and the current state of the shipping stem.