Australia confident wheat export delays will ease

 

 

Trade Minister Simon Crean is concerned about congestion and delays in exporting wheat from Western Australia but is confident Cooperative Bulk Handling Ltd. will work on ways to solve the problem, the minister said through a spokesman.

 

Responding to a letter of complaint about the delays received last week by Australia's Embassy in Seoul from Park Jung-sung, manager, Korea Flour Mills Industrial Association, Crean said he understands CBH is working with marketers to develop a new allocation system for port shipping orders to prevent delays after April and for future harvests.

 

The letter from the association said if the problem isn't fixed then South Korean importers would have no choice but to source wheat from elsewhere, lest they run out of the cereal.

 

"It isn't in the interest of Australian wheat exporters to lose customers. South Korea is a highly valued market," the spokesman for Crean said in a statement to Dow Jones.

 

Australian grain industry representatives told Crean they are meeting with a representative from South Korea's wheat import sector to discuss their concerns, the spokesman said.

 

South Korea is one of Australia's biggest wheat export markets, consistently taking more than 1 million tonnes of grain a year over the past decade.

 

Western Australia produced about 9 million tonnes of wheat in the 2008-09 crop, nearly all of which is available for export, making the region a major supplier to the global trade.

 

Already this season, from November 1, about 2.8 million tonnes of grain, mostly wheat, has been exported by CBH, which advises large quantities of grain are moving and that March might be a record for exports.

 

Grower-owned Cooperative Bulk Handling operates a monopoly over a grain export logistics system in Western Australia known as Grain Express, which sees grain being sourced, accumulated and hauled to the coast from almost 200 upcountry storage sites operated by CBH then loaded on vessels. CBH is allowed to operate the monopoly under an exemption from normal competition law by the national competition regulator.

 

No less than 19 vessels are loading grain cargoes or are at anchor accruing demurrage and waiting to load at the single berths at the four export terminals that CBH operates at the ports of Geraldton, Kwinana, Albany and Esperance, according to Web sites of the four port authorities.

 

A shipping schedule on CBH's Internet site lists more than 70 vessels either at port or due to arrive in the next two months to load grain and oilseed cargoes. CBH stopped taking bookings for berths at export terminals in early February.

 

Crean said decisions about the storage, handling and movement of grain - including vessel nominations - and the clearance of congestion at port are commercial matters for traders and bulk handlers to decide.

 

"We understand CBH is already working with marketers to develop a new allocation system for port shipping orders to prevent similar delays beyond April and for future harvests," he said.

 

Weather-related delays in a large harvest late in 2008 have challenged CBH in moving large volumes of wheat from farm to port in a timely manner, but CBH has increased its road and rail capacity to move the extra grain to port, the minister said.

 

CBH previously sheeted home responsibility for the congestion also to a lack of rail capacity while others have cited an increase in the number of exporters after a wheat export monopoly ended June 30 last year.

 

CBH wasn't available to comment Monday, because of a public holiday in Perth, where it is headquartered.