CBH, Australia’s biggest grains co-operative, has warned increased regulation in the market threatens to increase supply chain costs.
According to an Australian Financial Review report, CBH chief executive Jimmy Wilson on June 22 said the grain handling business would have to review its planned $750 million investment in a major up-country grain storage and handling network for Western Australia, if the Australian Competition and Consumer Commission presses on with its efforts to increase its oversight in the grain supply chain.
CBH and east coast grain handler GrainCorp have both condemned the ACCC’s efforts to push the Federal Government for more oversight. This week Wilson told AFR increased oversight would hurt the market.
“We don’t need unnecessary additional regulation if there is no evidence of market failure,” Wilson was quoted as saying. “This will burden our growers with unnecessary costs and hinder the flexibility that is needed in our network to help it perform.”
Wilson reportedly said CBH would find it difficult to go on with its major planned WA investment with the looming prospect of increased regulation.
He said the ACCC’s proposed changes would have a “chilling effect on investment in improving country infrastructure and operations”.
Wilson’s remarks came as CBH formally announced it had cut storage and handling fees by $4 a tonne for the upcoming 2018/19 harvest.
“We know the international competitiveness of Western Australian grain is under threat from fierce competition from the Black Sea and reducing our supply chain fees and improving efficiency is essential to keep grain growing viable for generations to come,” Wilson said in an official statement.
CBH said it would split the $4 per tonne reduction between grower and marketer fees, but Wilson said the growers were the major winners.
“Ultimately all supply chain costs are borne by the grower and we expect to see the full $4 per tonne value returned to them through reduced receival fees and competitive pricing for grain,” he said.