CBH lifts fees to cover big Wheatbelt spending plans

Australia’s biggest grain exporter expects to pump about $250 million a year into its Wheatbelt network of bins and other infrastructure in coming years and is increasing fees to help cover the costs. CBH Group revealed yesterday its supply chain fees would increase by $2.20 a tonne for the coming harvest. Charges vary according to grain type but the increase brings these to $29.40/t for wheat, which CBH noted was below 2014 levels and cheaper than its interstate peers. Ben Macnamara, chief operations officer at CBH, said a similar fee increase was likely next year. Mr Macnamara will be acting chief executive from July 1, when CEO Jimmy Wilson departs the co-operative. Mr Macnamara said that over the past five years, CBH had invested nearly $1 billion in the network. But with the State’s average crop size continuing to grow — the five-year average crop size has increased by 60 per cent over the past five years to 14.2mt — it would need to keep investing. “We must invest more to continue improving our ability to receive the harvest efficiently, sustain current assets and infrastructure and increase the focus on getting tonnes to market more efficiently,” Mr Macnamara said. Doug Warden, chief financial officer at CBH, said it was appropriate to spend between 2 and 3 per cent of the network’s $5b replacement cost in maintaining and sustaining the network, equivalent to about $150m a year. Additional funds would need to be spent on enhancements and expansions as the crop size grows. Mr Macnamara said the focus on new investments would include enhancing outloading capability, adding storage for increased crop size and continuing to improve site cycle times. On recent supply chain challenges, which had caused major delays in getting grain to port on time, Mr Macnamara said there were some improvements at regional ports, with Esperance now close to normal. Issues at Kwinana were unlikely to be resolved until at least late August, with the rail driver shortage having the most impact on the export program. Delays have led to mounting demurrage for exporters — estimated by industry commentators to be about $20m — and are risking WA’s reputation as a reliable grain supplier.