Farmers hit the road to avoid CBH freight rate surge

Farmers delivering grain to CBH’s three most expensive receival sites say they are disappointed but willing to fork out the “astronomical” fees to keep the bins open. An investigation into CBH’s recent freight rate increases has revealed Holleton is the most expensive bin to deliver grain to in WA — for the second year in a row — at $37.62/tonne, up $4.91/t from last year. Mt Walker ($34.87/t) and Bonnie Rock ($34.73/t) are the second and third-most expensive bins. CBH’s Holleton site is in the eastern Wheatbelt, 40km north-east of Mt Walker, and 400km east of its natural port — the Kwinana Grain Terminal. The bin will not open this year, with CBH acting chief operations officer Mick Daw citing “severe frosts” as the reason why. “(This) was confirmed by growers in the area,” he said. Holleton farmers can instead deliver to the second-most expensive bin in WA — Mt Walker — for a cost that is up $4.55/t on last year. Bonnie Rock is up $4.523/t compared with last year. Scott Stirrat farms midway between the Holleton and Muntadgin ($29.37/t) bins, but prefers to make the 75km trip to Merredin for the cheap rate ($22.15/t). “I avoid Holleton and Muntadgin now because of the freight rates, and deliver most of my grain to Dulyalbin and Merredin,” he said. “CBH installed 60,000 tonnes at Dulyalbin in 2019, but the rate ($33.79/t) means everyone now wants to go to Merredin, which is 100km away. “I find it strange to price bins out of being used after investment. Growers are happy to have bins open, but we all run businesses.” Mr Stirrat said farmers realised there was “money to be saved” by carting further, but he said most wanted local points to be “reasonably priced” and to use them. “In a year with a significant harvest, you would think CBH would have priced the outer bins more competitively,” he said. “That would keep grain flowing into those decentralised bins.” Mt Walker farmer Pete Cowan plans to deliver some of his grain locally this year, but trucks most of it 40km away to Narembeen, which this year costs $30.25/t. He said CBH was “pushing travel” on to farmers and he was worried unused bins with “astronomical” rates would be underused and closed by CBH. “Mt Walker has traditionally been an expensive bin, but it does hurt when they have whacked another $4.55 onto it,” Mr Cowan said. “Even in the poorer years, if farmers can make it into town (Narembeen) then there are a lot that will (to save on the freight rate), but it clogs up that bin. “Then the facilities don’t get used. We want bins to stay open.” Mr Cowan also raised concerns about the freight rates driving an increase in trucks on the road. “Is it fair my family has to drive past 40 trucks on the way to Merredin?” he said. “If we had to do that in Perth there would be outrage.” Bonnie Rock farmer Stephen Sprigg said growers had been left with “little choice” as to where to deliver as CBH bins filled and closed prematurely this harvest. He hopes to deliver most of his grain to Wialki ($33.63/t), Mukinbudin ($28.19/t) and Beacon ($30.31/t) but said it would depend how quickly he could harvest. “I would rather save money and deliver elsewhere (not to Bonnie Rock), but it is about putting it where you can get it. Bins are filling up very quickly,” Mr Sprigg said. “We are in decline nine for grain prices, so we can wear a bit of the increased freight rate. “The rising cost of inputs is also going to be a factor, but we have economy of scale in our favour. Our margins are good on an above year... its just how it is.” CBH’s Network Strategy flagged Mt Walker and Bonnie Rock as two of 100 sites of the future, meaning they were among the bins that received 90 per cent of the annual crop. Holleton was listed as a site set to become “surge storage”, with the strategy revealing it would reach the “end of life” in four to 10 years. According to the strategy, this means the site won’t have any major maintenance invested and will be used “as seasons require”. Holleton farmer Mark Wilson said he would rather cough up the $37.62/t than lose the bin. He normally delivers 35 per cent of his grain to Holleton, but will this year make a 70km round trip to deliver nearly all of it to Mt Walker. “Freight is our single biggest farming cost in the Holleton and Mt Walker area,” Mr Wilson said. “I understand freight is expensive ... CBH builds a case by saying it makes it cheaper for us as growers, but it doesn’t. It costs us more in buying trucks and freight.” Bonnie Rock farmer Kim Graham said the $4.52/t increase at his bin was a “big jump” year-on-year, but said fertiliser and chemical costs were “more alarming”. “You wouldn’t want to see a jump like this year-on-year,” he said. “But spikes in chemical and fertiliser are more alarming.” A total of 17 CBH bins now cost farmers more than $30/t to deliver grain to, 12 of which are in the eastern Wheatbelt in CBH’s Kwinana North Port Zone. Bins costing more than $30/t in the Albany Port Zone include East Hyden, south-east Hyden, and Kalgarin. Those in the Kwinana South Port Zone include Ainsworth, Dudinin, Kondinin and Kulin. No bins in the Esperance Port Zone or Geraldton Port Zone cost more than $30/t.