Growers pave their own path

Tenindewa grower Tony Critch is part of a group of Mid West growers who deliver their own grain to port to avoid CBH's supply chain.

A former CBH director, Mr Critch said CBH should take very seriously the actions of grain exporter Bunge.

He said the group, which comprises 10 to 15 farmers, was still testing the waters but was loading its own ships.

"If there are any commercial advantages to go around CBH, people might find those and that would be great if they can," he said.

"The issue was loading our own ships and going around the whole supply chain, which is what is occurring with Bunge."

CBH general manager operations Colin Tutt said the group of Geraldton growers generated a premium for their grain last season by bypassing CBH's export system.

"We have been talking to those growers up there for a couple of years and they have been talking to other industry parties to see if they can do things differently to add better value to their enterprises," he said.

"Last year we did a special segregation with those growers through an exporter to try and get better value for their crop."

Mr Tutt said the growers still paid storage and export fees, but got better value for their grain in the market.

"They (received) a value premium into the markets because of the way the grain was segregated," he said.

He said the opportunity for other growers to do the same would increase into the future.

"Bunge has announced it is going to do something at Bunbury and there are a lot of grower groups around the State that work together and it can escalate quite quickly through those groups," he said.

"Everybody has the opportunity. I think that's the key reason why we brought in load optimisation (last year) to try and give growers better value.

"This year we are bringing in rail to give growers better value proposition for transport."

Tony said Bunge's operation would most likely expose cross-subsidies in CBH's delivery systems.

"This will be a first-class test case for everybody, including CBH, to find out if there are serious cross-subsidies in the system," he said.

"If Bunge find there is no margin there for it, CBH is charging the right price."

In the Geraldton zone, Mr Critch said he estimated CBH could be overcharging by up to $15 a tonne, to cover the costs associated with getting grain from up-country storage.

"Everything north and west of Mingenew and west of Mullewa and north there is no rail, everything goes to port - Binnu, Yuna or Northampton," he said.

"There are a lot of cross-subsidies within the storage and handling system and eventually they are going to be exposed.

"Our guess is there is a $10 to $15 per tonne overcharge to growers that deliver to port, which is what Bunge is trying to capture."

Mr Critch said the Oakajee port project would open up storage capacity at Geraldton, allowing a player like Bunge to enter.

"Once Oakajee kicks in that will free up space on the current port and allow the opportunity for a second player to do what Bunge are doing in Bunbury," he said.

"CBH has to take serious note of this because Esperance, Albany and Geraldton are ripe for the picking along the same lines as Bunbury."

This year Mr Critch sowed about 9000 hectares of crop, with his sons Daniel and Tim, 25km east of Mullewa.