SA grain supply chain to be reviewed by state Essential Services Commission

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THE cost of the grain supply chain in South Australia will be examined by the state’s independent economic regulator.

Review fan: GPSA chief executive Darren Arney.

The Essential Services Commission of SA announced last month it was launching an inquiry into the state’s grain supply chain to “determine the reasonableness of the costs underpinning the South Australian bulk grain supply chain”.

The study will attempt to determine the state’s grain export supply chain costs during the past 10 years, and identify any inefficiencies and ways to address these.

In March, the South Australian Treasurer Tom Koutsantoni wrote to the ESCOSA chair requesting the inquiry to:

PROVIDE transparency in regards to bulk grain export supply chain costs in the state;

FIND potential efficiencies in the system and;

REVIEW the mechanisms used for funding road and rail components of the bulk grain export supply chain costs.

Rural Solutions consultant and grains analyst Chris Heinjus said the review would be good for the industry.

However, he said with only one major grain trader in South Australia, Viterra, it would make any supply chain analysis “a complex topic”.

“Ultimately growers are looking at (the lack of competition) when you have one incumbent it’s hard for (another company) to come in and make a footprint,” he said. “Viterra bought the facility, they have a commercial right to make a return, and that’s where the complexity comes in.”

Grain Producers South Australia chief executive Darren Arney said the review was important as grain supply chain costs were one of the largest expenses growers faced, which they had no control over.

He said in the last harvest, free on board grain costs, which includes receival fees, monthly carry charges and vessel loading fees, were estimated to be about $50 a tonne. “Freight from up-country delivery points are in addition to the FOB costs and are also a significant deduction to the farmgate prices that grain growers receive,” he said. “These are a cost which are mostly outside of growers’ control … receival, storage and handling and port terminal costs cannot be sent back any further — growers are paying the full cost.”

Mr Arney said the analysis of supply chain costs was a recommendation of a state government parliamentary inquiry into the grains handling industry, which delivered its report in 2012.

Information on the inquiry, including how to make a submission which closes on May 12, can be found at escosa.sa.gov.au

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