Concern over bid to store grain

A plan to allocate up to 60 per cent of grain storage directly to WA’s biggest grain traders has come under fire, but CBH claims the system will be fair.

A submission currently before the Australian Competition and Consumer Commission (ACCC) seeks to change the current auction system for grain storage to allow 60 per cent of capacity to be directly allocated to the largest grain traders, rather than all of the storage decided by auction.

To be considered for direct allocation, a grain marketer must have forecast shipments of at least 800,000 tonnes but will be restricted to a maximum of 20 per cent overall storage capacity.

CBH supply chain manager Jodie Ransom said direct allocation would help iron out some of the problems of the auction system by allowing greater insight into the shipping profile throughout the year.

“There are issues associated with the auction system, including additional costs, fluctuating demand, requirement for certainty on what is being auctioned, the lack of apparent necessity for it in low demand years and the inability for marketers and CBH to engage in long-term planning before auctions are held, ” she said.

“We expect that the overall benefit to the system will be an increase in capacity and an overall reduction in ship waiting days when comparing similar seasons.”

Base load customers would be required to ship all year round, not block out particular port terminals or months and report frequently on shipping plans.

But not everyone thinks the move is a good idea.

Pastoralists and Graziers Association spokesman Leon Bradley said he could not see how the ACCC would approve the proposal.

“We think it’s simply a device created by CBH to withhold capacity from the trade, ” he said.

“It makes CBH simultaneously a competitor and a regulator of their competition, they’re seeking to gain an advantage they haven’t earned through performance but through regulation they design and enforce.

“It’s extremely anticompetitive in its intent… it’s not a healthy arrangement and it’s certainly going to disadvantage WA growers.”

But CBH rejected claims the move was anti-competitive.

“On the contrary, the CBH port allocation system is designed to allocate port capacity on a fair and transparent basis to all exporters who want to compete in the WA market, ” Ms Ransom said.

“Over the coming weeks, CBH will look to discuss some of these issues with the ACCC and if appropriate respond.”

Grain marketers Gavilon Grain Australia, Louis Dreyfus and Plum Grove all submitted proposals to the ACCC objecting to the base load proposal, while Emerald extended its support.