Nick G.
South Australian grain growers are still at odds with Canadian monopoly Viterra.
The company owns over 90% of the grain storage capacity in SA and all bulk shipments of grain must be processed through their ship loading facilities. There is increasing talk around the state of farmers re-establishing cooperatives in preference to having to deal with Viterra.
Background
Up until the year 2000, SA had a regulated grain market controlled by SA Cooperative Bulk Handling, a membership-based organisation. (True to the conservative nature of the farming community and its generally anti-“socialist” outlook, the huge SACBH initials on country silos during Hawke’s Prime Ministership were translated as “Sack Bob Hawke”.) In 2000, SACBH was changed to a shareholding company and listed on the stock exchange. This enabled it, under a different name, to be bought out by Viterra in 2009.
Viterra creates problems
No sooner had Viterra established its presence than problems began to appear. Farmers are paid according to a classification scale reflecting the quality of grain they have delivered to silos. The most precise method for determining grain quality is through use of a “falling numbers” machine. It can estimate the amount of shot and sprouted wheat considered unsuitable for milling. Such grains are worth less than those of a higher quality and sold as “feed” only.
Despite having access to falling numbers machines, Viterra chose not to use them. Instead it used visual assessments carried out by its staff. Farmers were incensed at the inaccuracy of these assessments and complained of being underpaid for wheat that they believed deserved a higher classification than that provided by Viterra.
The 2010/11 harvest season was marked by higher than average rainfall which produces swollen and sprouted grain, and thus laid the basis for disputation between growers and Viterra over their non-use of falling numbers machines. In the case of Tumby Bay and Cowell farmers, who managed to access and use machines, and who delivered grain to two independent storage facilities, the difference between what Viterra would have paid, and what they subsequently obtained, was as much as $140 per tonne. Allan Zerna of the Cowell silo committee said one grower had estimated his losses through Viterra at $500,000.
After this major PR catastrophe, Viterra agreed to increase its use of falling numbers machines, but the general issue of its monopoly control of the market remains.
Resentment of monopoly practices
The few existing cooperatives and private grain companies who make up the 10% of the SA market not controlled by Viterra are nevertheless at its commercial mercy. Viterra owns the storage and loading facilities at all SA ports, and charges a dozen or more fees for access to its facilities. They can thus book shipping times favourable to their own company, and place obstacles in the way of others seeking to deliver on export contracts. Instances have occurred where an interstate grain trader has been told by Viterra that there was no available shipping to fulfill his order, but that if he sold his wheat to Viterra they would be able to find a ship for themselves.
Rail access to ports is dependent on a long-term agreement entered into by Vitarra with the US-owned Genesse and Wyoming Australia (GWA) which manages most of the lines and rolling stock in SA. The cost of accessing GWA-managed lines for third-party grain handlers is significantly higher (tenfold) than on the few lines (e.g. Keith to Adelaide) managed by the Commonwealth’s Australian Rail and Track Corporation, which was created after the Commonwealth and State Governments agreed in 1997 to the formation of a ‘one stop’ shop for all operators seeking access to the national interstate rail network.
Other monopoly advantages exercised by Viterra include the control of market information, and restrictions on the operating hours of silos. Truck drivers complain of experiencing long delays between sampling and unloading, with waiting times of four hours or more compared to the pre-Viterra days of easy access to storage facilities. Viterra has not wanted to pay overtime rates to keep silos open for the convenience of deliverers for whom time is also money.
Ironically, it is conservative rural state MPs who are most vocal about the changes to the grain industry. Ian Venning, Liberal MP for the seat of Schubert, told a parliamentary enquiry into the grain industry in March 2011 that “… you could see this coming when we started to deregulate our grain system. At the time, we had a grower-owned storage and handling system … now we have a private company basically in charge of a monopoly.”
Growers see hope in return to cooperatives
Many farmers thought that the removal of the single desk represented by the Australian Wheat Board, and the opening up of the market to private competition would be to their advantage. Some would claim that this has been the case, but an increasing number are angered and frustrated by Viterra, which is under no obligation to do them any favours, and which is answerable only to its overseas shareholders.
Soured by the experience of a for-profit monopoly with dodgy practices, there are more and more growers talking of going back into cooperatives for the purchase and marketing of grain.
To enable such cooperatives to serve the needs of grain growers, the SA Farmers Federation has demanded the end of anti-competitive third party charges imposed by Viterra, equitable access to all rail infrastructure, equitable access to port storage and handling and to bulk grain vessels, transparent information about current market circumstances, and for grain sampling equipment to be calibrated and certified by an independent or a government authority, as in the case of weights and measures.
Throw out Viterra and bring back the AWB!
Whilst the talk of re-establishing cooperatives is a welcome sign of disaffection with the experience of capitalist market forces, cooperatives alone will not suffice to break the power of a big overseas company like Viterra.
President of the SA Farmers Federation John Lush warned back in 2004: “The US dominates Australia in the trading environment, and we cannot afford to lose any of our advantages such as collective bargaining and single desk marketing if we are to have any chance of competing internationally.”
It is not enough to subject Viterra to competition from grower cooperatives: it must be thrown out altogether and a re-nationalised Australian Wheat Board restored to its position as a “single desk” for grain sale and export.
Throw out Viterra!
Nationalise the AWB!
Bring back the “single desk”!
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