September 8, 2008

 

Australia's CBH's Grain Express Plan gains approval from competition authorities 

Regulator Australian Competition & Consumer Commission ACCC Monday (September 8, 2008) approved Western Australia-based Cooperative Bulk Handling Ltd's Grain Express logistics and pricing system for the upcoming harvest.

 

Grain Express allows buyers to offer prices, and packages a single-cost price for grain freight, storage and handling services at CBH's 193 upcountry sites to 15 key nominated destinations.

 

CBH's four export terminals handle 90 percent of Western Australia's wheat exports. The state accounts for close to 8 percent of the world's wheat trade.

 

Chairman Graeme Samuel said ACCC would not oppose CBH's plan as there will be significant efficiency benefits as a result of the central coordination of storage, handling and transport, and will likely not lead to a substantial lessening of competition in relevant markets.

 

"Following the recent deregulation of bulk wheat exports, the number of accredited exporters attempting to make their own storage, handling and transport arrangements within the grain supply chain could substantially increase," which might create inefficiencies, placing additional costs on all participants in the state's grain supply chain, he said in a statement.

 

Already, 11 companies have been accredited to export bulk wheat and more companies will likely be announced in coming weeks.

 

Grain Express does not limit the ability of growers and marketers to make their own grain storage, handling or transport arrangements, nor does it preclude competitors to CBH entering the market, ACCC said.

 

It is also satisfied by a CBH pledge to ring fence from its grain trading units information contained within Grain Express that could prove anticompetitive.

 

CBH Chief Executive Imre Mencshelyi said the company will now implement the "only workable solution" to the higher costs and logistical challenges presented by deregulation of bulk wheat exports and the emergence of many more exporters.

 

The system will deliver greater transparency on freight rates and help to ensure rail continues to be a competitive alternative to road for moving grain in the state, he said.

 

Western Australia is a major grain producing region, with total production - including wheat, barley, oats and lupins and other legumes - peaking in 2003 at nearly 17 million tonnes.