Blame game over freight rates

Jo Fulwood and Rueben HaleThe West Australian

Co-operative Bulk Handling has made no excuses for its estimated 6 per cent average increase in grain freight rates, throwing the blame squarely on Brookfield Rail for its increase in rail access fees.

According to CBH general manager of operations David Capper, Brookfield Rail's access charges were four times the rate of comparable rail line sections on the east coast.

He said Brookfield Rail had increased thefees by almost 20 per cent on some lines.

"Unfortunately, we were forced to sign an interim agreement (in April), after having to take our trains off the track, and we agreed under protest to a significant increase, and that increase is now feeding through and hitting growers in their freight rates," he said.

Mr Capper warned the estimates, put out last week, could rise further, after a renegotiation of the interim rail agreement, set to expire on December 31.

"Yes, those rates could go up, they shouldn't but they could and we really want to make sure that we are being open and transparent with growers," he said.

"Normally we have a high level of confidence in these October estimates, and it's only the season and crop size that impacts them, but this year, because of the unknown in terms of track access costs for 2016, there is a greater level of risk."

Mr Capper said some receival sites would have increases of up to 10 per cent, but on average the increase would be about 6 per cent.

He said this was the largest increase in freight rates since CBH-Watco took over the rail component of the delivery system.

Mr Capper said the Rail Access Code was completely ineffective.

"Brookfield can charge monopoly rent, without fear of regulatory oversight," he said.

"At the moment, because the code is a declared regime, the ACCC can't be involved, but certainly we are lobbying to have the Rail Access Code de-certified, as early as next year, because we don't believe it's an effective regime; it's not providing protection to the user."

Mr Capper said with Brookfield Rail announcing an $8.9 billion takeover bid of Asciano, all eyes were on the WA rail debate.

"The issues in WA are certainly known federally, and there is a lot of support, and there are certainly concerns about the situation," he said.

"Our sole reason for being opposed to that merger is because of the ineffective regulatory regime in WA; we are certainly not anti- foreign investment."

WAFarmers Grains Section president Duncan Young said while the estimates were extremely disappointing, CBH had been held over a barrel by Brookfield Rail.

"We are paying well above the rates paid by growers in the Eastern States," he said.

Mr Young said WAFarmers would also be talking to the Federal Government, along with other State farming organisations, about de-certifying the Rail Access Code so it could be scrutinised by the ACCC.

However, Brookfield Rail chief executive Paul Larsen has rejected CBH's criticism of the disproportion between WA and Eastern States rates, saying that his company's access fee represented a small portion of CBH's entire supply chain cost for each tonne.

"Grain rail networks on the east coast are heavily subsidised by Government on an ongoing basis, whereas Brookfield Rail's network is not," he said.

"In addition there are other differences between the east and west coast rail systems that make a direct comparison of charges between them problematic."

Bruce Rock Shire president Stephen Strange said while CBH and Brookfield continued to argue about rail access cost increases for the next two years, growers would have by now have already made alternative arrangements to freight their grain.

Mr Strange's comments come after he attended a Local Government Grain Infrastructure Group meeting this week.

At the presentation, Bunge general manager Chris Tyson spoke about his company's plans to build grain storage facilities at Arthur River and Kukerin.

Mr Strange said CBH would now face stiffer competition from rival Bunge as it markets its increasingly competitive transport rates to a larger slice of the Wheatbelt market.

"Bruce Rock growers south of town would have to bear the added expense of transporting grain extra distances to larger bins," he said.

_"We're seeing a $50 per tonne freight rate difference between shipping grain to Bruce Rock or to the standard gauge rail at Merredin." _

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