SOUTH Australian Liberal Senator Sean Edwards has called for a national auction system to govern the export of grain from Australian ports to overcome current problems in shipping stem management in grain states.
The call came after a recent Australian Grain Exporters Association (AGEA) board meeting found Australia's current auction systems to be expensive and sometimes inefficient.
The meeting also acted as a timely reminder of the role CBH played in WA's tender process and prompted CBH to defend itself against its critics.
Mr Edwards, a member of the Federal Parliamentary Rural Affairs and Transport References Committee looking into the $5 billion export grain network, said the industry must have a flexible nationwide approach.
He said the market had been distorted by the strong demand for shipping slots in WA because traders had become locked in by the high costs of trying to back out of contracts and reduced demand in other states because exporters were not freely able to change from a WA slot to elsewhere.
"This underlines the importance of having a uniform means of allocating slots throughout Australia administered by an independent central organisation with a vibrant secondary market for slots, so that exporters can easily move grain from one state to another to reduce market distortion," Mr Edwards said.
"The existing shipping stem slot system advantages one state over another from year to year depending on the season.
"When the wheat export market was opened up it was not the intention to switch from a statutory authority to commercial monopolies in each state, like the three sisters Viterra, CBH and Graincorp.
"Not only do they control the shipping stem slots, they charge non-refundable booking fees to other grain exporters but their anti-competitive behaviour is counter to the equitable and efficient access to export grain movement."
Mr Edwards said the only way to guarantee complete neutrality in the allocation of booking shipping stem slots was through an independent body so that variable shipping costs could be contained rather than the existing method which mainly benefited the dominant exporters in each state.
He said Australia's grain export facilities must operate at full capacity to ship an expected record Australian harvest of about 21.6 million tonnes this season.
"We don't need hassles over shipping slots disrupting the bulk handling system," Mr Edwards said.
"That is why a national auction program is vital to overcome the anomalies in the logistics operation so that everybody gains and not just the market dominators."
CBH did not necessarily believe there were problems with shipping stem management but instead, some outcomes which had differed from the original intended position.
"CBH proposed a base load system that would have put some dampening on the auction and provided a better line of sight on future demand," CBH supply chain manager Jodie Ransom said.
"The market is driving prices higher to obtain capacity.
"This is what the market does when a resource cannot meet all demand and no business can actually meet an infinite level of demand."
Ms Ransom said multiple marketers were now competing for the same export business which escalated the demand CBH had seen through the auction.
"A national auction system is not necessarily appropriate as capacity in one state is not necessarily able to be swapped with other states," Ms Ransom said.
"There are differing charges and differing rules for shipping from each state dependent on their individual circumstances."
CBH believed an overarching national auction system should not be introduced because it would make the auctioning of capacity more difficult to handle.
"To auction all states at the same time would create a huge workload on all marketers that would not be appropriate," Ms Ransom said.
"However Tradeslot, who manages the CBH auction system, has developed a platform that could potentially work to give nationwide transparency to all available capacity.
"CBH considers that the market distortion is the market in action and it is being driven by traders.
"The strong demand in WA is a reflection of the desirability of shipping from WA.
"It is only if a single company or co-operative owned ports in every Australian state that it would be ambivalent about marketers moving tonnage from one of its WA ports to one of its NSW ports."
Ms Ransom said CBH had introduced increased flexibility to the management of shipping slots which allowed exporters to move capacity between port zones within WA and move forward and backward wherever there was spare capacity.
"A secondary market exists that allows marketers to trade capacity," she said.
"It is also not unforeseeable that this platform could also be used to trade capacity between States."
Ms Ransom said CBH had a high demand for capacity and predicted it could be loading up to 400 vessels this season which would undoubtedly bring conflict since the bulk handler anticipated more than one a vessel a day to arrive.
It was only last month a group of WA grain marketers questioned what they believed to be a significant loop hole in CBH's Australian Competition and Consumer Commission (ACCC) approved port auction system.
A Perth-based marketer questioned one of the most recent harvest auctions and suggested how easily it might have been manipulated by a large auction participant with significant market power.
The marketer examined the state of the auction system and suggested it had the potential to be manipulated to disadvantage other bidders by driving premiums up for certain slots and also to ensure there was spare capacity at the end of the auction which enabled cheaper shipping slots to be purchased after the auction had been completed.
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