PGA fights to end rail monopoly

The Pastoralists and Graziers Association has ramped up efforts to quash CBH’s monopoly on grain freight.

The PGA, supported by the Australian Grain Exporters Association, launched its Competition on Rail campaign this week in a bid to create a more open and low-cost grain haulage system in WA.

Growers, exporters and State members of Parliament provided support for the campaign, calling on the Australian Competition and Consumer Commission (ACCC) to revoke CBH’s exclusive dealing authority to operate Grain Express.

PGA western grain growers chairman Rick Wilson called for the end to Grain Express.

He said they wanted the most efficient rail system for the State’s grain industry — one with multiple operators vying for customers, the least cost to producers and a reduced impact on roads.

“Competition is paramount for WA grain growers to have an efficient and best value grain haulage system, as well as protecting our communities by keeping grain on rail,” he said.

“The benefits will continue to be thwarted through the continuation of Grain Express, which prohibits competition throughout the grain supply chain in favour of protecting CBH’s monopoly.”

In December, the ACCC made a draft ruling on Grain Express in favour of revoking the Grain express exclusive dealing notification.

PGA claims Grain Express allows CBH to leverage its market power in supplying receival, storage and handling services, preventing competition to supply transport services to customers who use CBH’s upcountry storage facilities.

The campaigners say allowing competition in the system will lower transport costs, increase grower profitability, provide a least cost pathway to port option for grain producers and increase the competitive reputation of WA grain.

The PGA, on behalf of the industry, has signed an open letter to the ACCC, urging the commission to listen to their needs and allow competition to ensure an efficient and best value haulage system for the benefit of the whole grain industry.

PGA said the industry was concerned that unless a decision about competition was made sooner rather than later, there was a risk to WA’s grain export reputation if CBH was not ready to begin operations with US-based company Watco by the 2012–13 harvest season.

State parliamentarians backing PGA’s push for an end to Grain Express included Member for the Agricultural Region Jim Chown, Member for the Mid West Brian Ellis, Member for Swan Hills Frank Alban, Member for Agricultural Region Mat Benson and Member for South Metropolitan Area Lynn MacLaren.

CBH remains committed to Grain Express, warning that the ACCC’s proposal to strip it of its Grain Express monopoly would result in a “logistical nightmare” in getting grain from the co-operative’s 200 up-country storage sites to ports for export.

Industry sources have warned any move to unwind the monopoly without an adequate transition period could generate further uncertainty in an industry reeling from a drought-ravaged season.