THE state government has instructed the Essential Services Commission of SA to review SA’s bulk grain supply chain costs on behalf of grain producers.
The purpose of the inquiry – initiated last month is to determine the “reasonableness of the costs underpinning the SA bulk grain supply chain”, including the costs in the past 10 years and providing options to address any inefficiencies identified.
Grain Producers SA CEO Darren Arney welcomed the decision, saying the inquiry was great news for growers and a key element of GPSA’s policy on storage and handling competition.
He said the inquiry’s terms of reference would ensure it was a detailed and thorough review, covering components of supply chain costs, their efficiency and cost recovery, harvest trends in the past decade, and working collaboratively across a number of government departments.
“The inquiry has been commissioned by Treasurer Tom Koutsantonis, with support of Transport Minister Stephen Mullighan, and we acknowledge their foresight in acting to investigate what is one of the largest, if not the largest, costs in grain production in this state,” Mr Arney said.
“For the 2016-17 harvest, Free on Board (FOB) costs are estimated to be about $50 a tonne. FOB costs include a number of charges, such as receival fees, monthly carry charges and vessel loading fees. Freight from upcountry delivery points are in addition to the FOB costs and are also a significant deduction to the farmgate prices that graingrowers receive.
“These are a cost which are mostly outside of growers’ control.
“Good grain production managers can make smart decisions about how to become more profitable by controlling on‐farm costs, such as machinery upgrades or the cost of sowing a crop.
“But receival, storage and handling and port terminal costs cannot be sent back any further – growers are paying the full cost.
“ESCOSA reviewing supply chain costs was also raised as a recommendation of the multi‐partisan Select Committee of the Grain Handling Industry, which delivered its report in 2012.”
The key objectives of the inquiry are to:
- Provide transparency in regards to bulk grain export supply chain costs in SA.
- Determine areas where future efficiencies may be achieved, and
- Review the appropriateness of mechanisms used for funding road and rail components of the bulk grain export supply chain costs.
Submissions close on May 12.
- Details: escosa.sa.gov.au/