ESCOSA content iconInquiry into the South Australian bulk grain export supply chain costs

  • Project Released: 7 Apr 2017
  • Project Closes: Dec 2018
  • Contact: Sean McComish


On 16 March 2017, the Treasurer provided the Commission with Terms of Reference for an inquiry into the South Australian bulk grain supply chain costs (Inquiry). This request was made pursuant to Part 7 of the Essential Services Commission Act 2002.

The purpose of the Inquiry is to determine the reasonableness of the costs underpinning the South Australian bulk grain supply chain. Specifically, the Terms of Reference require the Commission to undertake the Inquiry in two parts:

  • In part 1, the Commission is to inquire into the South Australian bulk grain export supply chain costs over the past 10 years, and
  • In part 2, should the Commission find areas where bulk grain supply chain costs are identified as inefficient, options should be provided for addressing those inefficiencies.

The draft report (Part 1) is to be provided to the Treasurer no later than 30 June 2018, with the date for the final report (including Part 2 if required) to be provided to the Treasurer being no later than 31 December 2018.



Current status is Final

  • Initiate
  • Submissions
  • Further info
  • Draft
  • Further info
  • Submissions
  • Final


The Inquiry into the South Australian bulk grain export supply chain costs was conducted by the Commission pursuant to its formal Inquiry powers as established under the Essential Services Commission Act 2002, in accordance with the Terms of Reference issued by the previous Treasurer on 16 March 2017 (as subsequently amended).

The findings presented in the Final Report address the Inquiry’s Terms of Reference. They are substantively the same as those in the Draft Report and are based on the facts and evidence available to the Commission. In summary, the findings are that: 

  • South Australia is a small player in the world-wide bulk grains export market. Its grain export supply chain faces continued competitive threat from existing and emerging low-cost producers. While the State produces high quality grain, and makes that grain available for export in a very timely manner, our supply chain has little influence on the global market, is vulnerable to global trends and operates under an imperative to reduce costs in order to maintain market share.
  • Our grain export supply chain can be broadly categorised into three segments: freight transport, port facilities, and storage and handling.
  • Freight transport and port services are either competitive or subject to sufficient regulatory oversight so as to provide a suitable proxy to competitive outcomes. Viterra’s upcountry storage and handling facilities are not covered by industry-specific economic regulation; in consequence, the Inquiry has focussed largely on the performance and behaviour of Viterra, given its position of strength within the grain export supply chain.
  • At this time, the grain export supply chain is not demonstrably inefficient in terms of its costs, from both an overall and individual supply chain segment perspective. Further, while Viterra is presently earning returns (on average) towards the upper end of what might be expected for a firm with Viterra’s level of risk, those returns are not currently excessive. The extent to which this continues to hold true over time will be dependent on Viterra’s future actions as a provider of grain export supply chain services, given its position of strength within the supply chain.

Appendix G of the Final Report summarises the submissions and key issues raised through the Inquiry’s consultation process. It provides the Commission’s view on those matters and explains how they have been addressed or otherwise dealt with in the Final Report and findings.