CBH discusses benefits of deregulation

by World Grain Staff
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WEST PERTH, AUSTRALIA — The CBH Group informed the Senate Rural Affairs and Transport Committee Inquiry on Operational Issues in Export Grain Networks about the efficiencies and benefits created since the deregulation of the wheat industry, during the first week of September.

The enquiry was established following difficulties that occurred during the last harvest on Australia’s east coast.

CBH Chief Executive Officer Andy Crane spoke on behalf of the cooperative’s 4,700 Western Australian grain grower’s members and indicated that the CBH Group had made a number of innovative changes to its operations that have benefited growers significantly since the partial deregulation of wheat marketing arrangements were introduced in 2008.

Crane said that the Western Australia grain market was virtually totally dependent on the export market and as such CBH had focused every effort on ensuring that its storage, handling and port operations continued to improve and provide services that were the most efficient and economic in Australia.

The introduction in 2008 of the Grain Express system had through aggregation of the freight task enabled freight rates to be driven down as well as achieving further efficiencies in the storage and handling system both upcountry and at port.

In addition Grain Express had facilitated a massive increase in the range of marketing options and participants that offered product to WA grain growers — all available online and across our nearly 200 grain receival sites throughout the wheatbelt.

Port operations had also been upgraded through the introduction of an independent shipping slot auction system which allows the market in a fair and equitable manner to efficiently allocate a key export resource

Investments in rail equipment had also been possible with CBH to take delivery of Australia’s most modern dedicated grain rail fleet from mid 2012 which will greatly improve grain delivery to port.

Much progress has been made since 2008 however care must be taken not to drive up costs through over regulating the industry.

“Protecting grower’s interests should not be confused with the introduction of regulation that leaves them worse off. We are already operating in an extensive legislative framework that provides adequate protection for industry participants; further regulation will be burdensome and add costs to the increasing compliance we already undertake,” Crane said.

The CBH submission to the enquiry urged senators to take notice of the Productivity Commission report released in July 2010 which recommended a gradual removal of temporary measures introduced to ‘cushion’ deregulation.

“The Wheat Exports Australia’s role is coming to the end of its lifecycle and as an industry it is important we reduce unnecessary oversight costs and regulation and instead become self regulating through industry bodies and voluntary codes of conduct," he said.

Crane said legislators must be also be careful not to disadvantage Australian growers against other export origins, which could result in increased costs, loss of efficiency and loss of innovation.

“A number of the newer entrants to the Australian grains industry were global, vertically integrated marketers, handlers and processors. Further regulation of Australian players potentially means we remain at a sub-competitive scale whilst favoring those already integrated at a global level, particularly for WA where we rely heavily on the export market,” Crane said.
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