PROPOSED structural change at GrainCorp have been met with concern from state farming organisations, worried at potential market distortions as a result of the adjustment.
GrainCorp announced at the end of August it was changing its structure through the creation of a single grain business unit set up via a merger of the company’s existing storage and logistics and marketing businesses.
Warracknabeal farmer and Victorian Farmers Federation grains group president Ross Johns said change in business was inevitable.
“It will now be a challenge from a farming point to view to see how the changes will benefit farmers,” he said.
“GrainCorp is still a large storage operator in the market.
“If the market was more open and had more multiple players, more farmers would be able to accept the changes.”
Mr Johns said GrainCorp was never going to make changes that disadvantaged their business. “We need to see more transparency in the market as a whole,” he said.
In Queensland, AgForce grains president Wayne Newton said while his organisation wanted to see a vibrant and secure GrainCorp business he was worried the restructure would create an artificial advantage for the company over its competition in the marketing space.
"The GrainCorp restructure puts the company's marketing function in a very powerful position with visibility of all their competitors' grain stored in the bulk handling system, and highlights why we urgently need a more open, transparent grain stocks reporting system to level the playing field," he said.
A GrainCorp spokesman said the processes regarding external buyers would not change.
“GrainCorp is simply streamlining our customer interface and processes,” he said.
“There is no change to our existing policy that external traders’ confidential information is not provided to our traders,” he said.
NSW Farmers grains committee chair Rebecca Reardon had similar concerns to Mr Newton.
“Graincorp market 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 via insight into their competitors’ coverage and positions,” Ms Reardon said.
“Furthermore, they will have enormous ability and incentive to influence their competitors’ grain execution and to arbitrage stocks as they choose.”
“We want to make sure the changes do not lead to anti-competitive behavior.”
Mr Newton said the tremendous advantage GrainCorp would have in terms of market information made it even more pressing that the Federal Government made progress on a mandatory stocks reporting scheme.
“We want to see something that comes out monthly by grade by port zone,” he said.
“It needs to be something where the bulk handlers are required to release the information – a pilot voluntary scheme was trialed but it failed,” he said.
Mr Newton disputed claims from some within the industry that growers would actually be worse off with wider stocks information available as buyers would have a clearer handle on grain reserves.
“We just want transparency and openness, we don’t want the volatility that comes when everyone is trying to guess how much grain is out there, just mechanisms that lead to a fair price for our product.”
He said stocks reporting schemes were working well in other nations, such as the US.
Both Mr Newton and Ms Reardon urged the Australian Competition and Consumer Commission to monitor the GrainCorp restructure to see that it is not creating a market distortion in terms of stocks information or port access.