Graingrowers railroaded

Wheatbelt growers have been hit $5 million extra for an interim rail access deal which will run until the end of this year.

CBH appears to have been "backed into a corner" by Brookfield Rail and left little choice but to sign the deal.

The interim commercial arrangements and the commercial agreement between Brookfield and CBH came into effect last Friday and paved the way for negotiations for a long-term agreement, which will include CBH seeking access to some of the closed Tier 3 railway lines.

The deal between the companies was struck under trying conditions, with CBH ordered to remove its trains from the network the day before after negotiators failed to make an agreement.

Under the deal, CBH will pay up to $1.40 extra per tonne to transport the estimated remaining 4 million tonnes of grain by rail to port.

CBH claims it had no option than to sign the deal in order to "protect" the international reputation of the WA grains industry, saying to be locked out of rail would be irreversibly damaging for growers.

The agreement will see an increase in current rail access costs across the network, expiring on December 31.

CBH chief executive Andy Crane said all previous counter offers had been rejected by Brookfield Rail.

"CBH is extremely disappointed that the situation escalated to the point where trains were stopped," he said.

"We remain of the view that renewing the agreement on like terms until an outcome is reached through the Code process would have been a proper and appropriate outcome.

"It is critical that the Code process will give us a fair and reasonable long-term agreement to secure a sustainable future for WA's grain industry.

"Moving grain on rail continues to be a major priority for CBH, and we will keep battling to make that a long-term reality for WA growers, so that they can use this State-owned asset in a fair and reasonable manner.

"We are heartened by the ERA's setting of pricing indicators that we believe show that WA growers are already paying too much for rail access.

"A clear example of this is the fact that Eastern States counterparts pay significantly less than Western Australian rail access costs. We will continue to fight for a fair go for WA's grain industry."

Brookfield chief executive Paul Larsen confirmed the new deal was not retrospective.

Mr Larsen said the agreement would provide growers with the surety of rail access past next harvest.

"Overall the deal does involve a modest increase to price that's well under a $1/tonne (overall), and that represents less than 0.5 per cent of the price per tonne that grain sells for, so we think that's reasonable and affordable," he said.

Meanwhile, CBH operations manager David Capper said it was now more critical than ever that the Economic Regulatory Authority process delivers a good long-term outcome for its growers.

"Our customers have an expectation of execution that CBH manages and it is critical that we maintain our reputation as a low-risk exporter of grain," he said.

"In order for CBH to negotiate the deal that we did meant that we have had to agree to a fixed component of grain tonnage which will be an extremely hard stretch to meet."

CBH is continuing to negotiate a long-term access agreement through the Code process and is currently about halfway through a 90- day negotiation period.

Wheatbelt Railway Retention Alliance chairman Greg Richards said growers were "outraged" Brookfield had the audacity to deliver an ultimatum to the State's growers in the middle of the ERA process.

"This action by Brookfield endangered grain deliveries to meet shipping requirements and put at risk the integrity and reputation of WA grains industry," he said.

"The condition and performance of infrastructure and path to port for a major export industry - the grains industry - is absolutely government territory.

Mr Richards also said the assumption by Mr Larsen growers could afford the freight increase was incorrect.

"For many growers, particularly in the Eastern Wheatbelt, poor seasons have resulted in increased debt levels," he said.

"Gross price of grain is not an indication of profit margins. Brookfield profit stated in the Parliamentary report is $187 million.

"Their demands for a 30 per cent to 40 per cent increase in access fees equates to corporate greed. Those in Tier 3 area have already seen freight increases of up to $4/tonne. An extra $1.50 per tonne takes those growers up to an increase of $5.50/tonne.

"For an average season and average-size grower this is an increase of $27,500 per season in freight costs on top of the previous access fee, and could very well be the difference between profit and loss for growers. This is not sustainable."

Quairading farmer Peter Wallwork is among the farmers who are angry growers will have to foot the bill for the new interim rail agreement.

Mr Wallwork said CBH should own and manage the rail lines to ensure growers receive the best freight rate possible.

"I am also a strong supporter of re-opening the Tier 3 lines, particularly between Quairading and York," he said.