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 ACCC pushes for WA grain competition 

ACCC pushes for WA grain competition

12 Dec, 2010 02:30 AM
The Australian Competition and Consumer Commission (ACCC) will push for competition in the West Australian grain logistics system, after looking into CBH’s Grain Express program, which allows the company to require growers who store grain in its up-country sites to also use CBH transport services to move the grain to port.

There was an arrangement between CBH and the ACCC in regards to Grain Express, after previous ACCC investigations allowed it on the grounds of overall supply chain benefits, however this arrangement, which allowed CBH to compel growers to use its transport, will be cancelled by the ACCC.

CBH owns around 90 per cent of up-country storage facilities in WA and also owns and operates WA's four port export terminals.

ACCC chairman, Graeme Samuel, said he considered the previous arrangement to hinder competition.

"The ACCC recognises the potential benefits in CBH offering a whole of supply chain receival, storage, handling and transport service, however, the forced tying arrangements are not necessary to realise these benefits," he said.

He said that if, as claimed, CBH’s bundled services offered the best prices, growers will continue to use them.

The example in eastern States was also cited by Mr Samuel.

"Grain is transported efficiently and cost effectively to port in other States, often as a bundled service similar to CBH's arrangement, without forcing growers to acquire all relevant storage, handling and transport services from a single supplier," he said.

Mr Samuel said the ACCC revoking the notification will, for the first time since deregulation of wheat export marketing in 2008, provide WA growers who use CBH's up-country storage facilities with choice about who they use to move their grain to port.

He said CBH was still free to offer the services.

"If the ACCC revokes the notification CBH will still be able to offer a bundled receival, storage, handling and transport service. All that will change is that growers who store their grain with CBH will be free to choose whether to use CBH's transport services or organise their own."

CBH and interested parties now can comment on the draft notice before the ACCC makes a final decision about whether to revoke the notification.

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Date: Newest first | Oldest first
Given that all freight services provided within Grains Express result from competitive tendering I find it hard to see reason in the ACCC approach. This approach may inhibit the ability of CBH to introduce Quality Optimisation ( grower weighted averaging). The percieved benefits of "unbundling" Grains Express in all likelyhood will be far more negatative than probable Quality Optimisation benifits( Estimated to be up to $8 ton)
Posted by XD, 12/12/2010 8:10:49 AM
Considering we are paying twice as much to export our grain in the eastern states as opposed to WA how does the ACCC justify this crap they are trying to sell WA Farmers?

Graincorp has a monopoly in NSW yet we are paying through the nose in supply chain cost why because Graincorp is a listed company looking after shareholders where CBH is owned by growers.

The Government and its agents are hell bent on destroying the Australian Grain growing Industry.

Posted by Mark, 13/12/2010 5:21:59 AM
XD there is currently only 1 main provider for the bulk of grain movements - ARG. Tendering only occurs for the relatively small amount of road freight - so CBH/growers have to take what is set unfortunately. Also Q.Opt is a bit of a financial con really if you think carefully about it. Although I think freight is a side issue with minimal margin - the biggest difference would occur if CBH port monopoly could be broken - then real competition and reduced costs would result. This is evident from the way charges where changed last year - a bit of "wool over our eyes".....
Posted by Jimmy, 13/12/2010 12:43:20 PM
Jimmy the only thing holding back any Tom Dick or Buckeridge from loading ships with bulk grain is CBH do this at below what they could .

And I said Ships (more than one) as opposed to loading one boat with an auger and a line of trucks..

Posted by X AG Socialist, 14/12/2010 12:47:19 PM
Sorry "Jimmy" but "real competition and reduced costs" is not the obvious outcome from deregulation, it certainly has not been the case in the NSW grains industry since deregulation, and there is ample evidence in every State that privatisation and "competition" of former public owned assets has not resulted in either competition or investment in infrastructure. The presence of multiple exporters trying to operate through NSW ports is actually slowing down our ability to maintain throughput, mainly because of the now disjointed supply chain
Posted by mark2, 16/12/2010 9:10:47 PM

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