ACCC Clears Viterra’s LTA Proposal for South Australian Bulk Wheat Ports
Image Courtesy: ViterraThe Australian Competition and Consumer Commission has given the green light to Viterra’s proposal to introduce long term agreements (LTAs) to allocate port capacity at its six South Australian bulk wheat ports.
Long term agreements will replace the current auction system as the primary method of allocating shipping capacity at Viterra’s South Australian ports.
As disclosed, LTAs will be introduced for the 2016/17 shipping year, as the capacity for the current year has already been allocated through the auction system and first-in-first-served process.
Long term agreements will be available to export customers for an initial fixed term of three years, with a minimum commitment of 25,000 tonnes of capacity in each of the three years. Capacity will also be reserved for short term allocation each year.
“The ACCC considers that Viterra’s proposal, submitted in November, substantially addresses concerns raised in the ACCC’s draft assessment to not approve Viterra’s June proposal,” ACCC Commissioner Cristina Cifuentes said.
Key amendments of the November proposal included a mechanism for the ACCC to review the initial long term capacity allocation process and a reduction of the initial term of the LTAs from five to three years.
“These amendments, together with other features and safeguards in the proposal, strengthen the negotiating position of the smaller and medium sized exporters and represent an outcome that is expected to better facilitate effective competition in the South Australian bulk wheat export industry,” Commissioner Cifuentes said.
Viterra formally lodged an initial proposal in March 2015 and made subsequent revisions in June, September, and November.
Tim Krause, General Manager, Viterra Operations, said the ACCC’s decision would provide significant benefits to the South Australian grains industry including growers, exporters, end-use customers, service providers and infrastructure owners.
“The take up of LTAs in the CBH system in Western Australia this year has been very successful and it is the third year of LTAs on the East Coast. This decision will allow us to provide a service to export customers that better meets their needs for long term certainty and flexibility.
“LTAs benefit growers by providing a robust marketplace, with multiple buyers, in which to sell their grain. It helps South Australia compete with other origins to attract grain exporters,” Tim said.
