Transport monopoly on the line

Rachel DonkinThe West Australian
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The chief executive of the country’s biggest grain handler says “nothing’s changed” since the competition watchdog agreed there were major benefits in giving CBH Group a monopoly on grain transport in WA two years ago.

CBH Group chief executive Andy Crane made the claim during a closed Australian Competition and Consumer Commission hearing in Perth last week, as part of a last-ditch bid to dissuade the regulator from stripping the co-operative of its Grain Express system in WA.

CBH has warned the proposal to strip it of its monopoly — which was ticked off by the ACCC following the deregulation of wheat exports in 2008 — would result in a “logistical nightmare” in getting grain from the co-operative’s 200 up-country storage sites to ports for export.

Under the Grain Express system, growers who use the co-operative’s storage facilities must also use CBH’s transport system to move their grain to port.

The proposed shakeup would open the way for third-party operators to bypass CBH’s services and seize control of farmers’ grain at the start of the supply chain, leaving CBH at risk of losing the scale needed to offset the high fixed costs of its infrastructure.

Speaking after a panel hearing in Perth on Thursday, observers said the majority of viewpoints appeared in favour of CBH’s bid to preserve its monopoly.

But Dr Crane warned against jumping to conclusions about the ACCC’s likely decision.

“We made our case, as we’ve done in recent submissions and as we did in 2008, ” he said. “Back then the ACCC agreed there would be significant efficiency benefits (with Grain Express) and that it would not lead to a substantial lessening in competition — we say nothing has changed.”

CBH controls about 90 per cent of the State’s up-country storage facilities and owns and operates four port export terminals, and argues the efficiency of its Grain Express system allows it to charge farmers substantially lower transport fees than its competitors.

The ACCC has given no indication of when it is likely to hand down its formal decision on the future of Grain Express. Representatives of the State’s two key farming organisations and a handful of CBH’s competitors also attended last week’s hearing.

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