Grain handling monopoly on the line
Grain Express’ monopoly on up country grain handling is under threat after the Australian Competition and Consumer Commission (ACCC) issued a draft notice to revoke its notification.
If that were to happen, growers would be able to choose who moves their grain from storage to port for the first time since deregulation.
An ACCC investigation into Grain Express has been ongoing since public submissions closed in July.
Grain Express also faced grower criticism last month during a Productivity Commission inquiry report into wheat export marketing arrangements.
Grower groups — including the Pastoralists and Graziers Association (PGA) and the WA Grains Group (WAGG) — have called for more competition within the sector.
According to the PGA and WAGG, retracting Grain Express’ hold over transportation would allow competition and drive prices down.
CBH owns about 90 per cent of up-country storage and ACCC chairman Graeme Samuel conceded that allowing growers an alternative would put competitive pressure on the company.
“The ACCC recognises the potential benefits in CBH offering a whole of supply chain receival, storage, handling and transport service, ” he said.
“However, the forced tying arrangement is not necessary to realise these benefits.
“To the extent that CBH’s storage, handling and transport service is an efficient system, delivering benefits to growers, they will continue to use it without being forced to do so.”
Mr Samuel said most of the parties that had objected to Grain Express’ monopoly had indicated they would continue to use the system even if they were not forced to, but wanted the option to choose.
But CBH, which claims it does not make a profit from Grain Express, is disappointed with the ACCC’s decision.
“We remain of the strong view that Grain Express provides a net benefit to the community and does not significantly lessen competition in the market for grain transportation services, ” a CBH spokeswoman said.
CBH executive officer Andy Crane has previously said if the ACCC’s finding was not in CBH’s favour, the result would be a logistical nightmare.
“There will be 29 buyers going to every site to open up the site multiple times to retrieve their own grain, ” he said.
The ACCC is now calling for comment on the draft notice before handing down its final decision.
Submissions close on January 12.
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