Grain fee concern

28 Nov, 2001 10:00 PM
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CO-OPERATIVE Bulk Handling's statewide set fee for grain storage and handling could threaten its stability in the face of eastern states competition infiltrating WA, according to the Pastoralists and Graziers Association.

In addition, since the merger proposal of CBH and the Grain Pool of WA, and threats by CBH's biggest customer AWB Ltd to open its own grain storage facilities in WA, grower concern over the set price have surfaced.

The PGA believes differential pricing may be the answer, which would reflect the true cost of grain storage and handling.

It says CBH's universal fee had sent the wrong message to its customers about the cost of its storage and handling services.

PGA western grain growers committee chairman Leon Bradley said as some CBH services cost more than others and some less, competitors therefore had an opportunity to undercut CBH by building at less expensive locations.

Although he described it as an extreme example, he said a competitor could soon open a port facility that would only charge for that service.

"People who deliver direct to port pay the same fee as others up country," Mr Bradley said.

While the PGA wants the Bulk Handling Act to be repealed to allow differential pricing, Newdegate graingrower Julie Newman believes the Bulk Handling Act could simply be amended to remove clause nine which she said states "company not to discriminate or give preference".

This option was backed by legal opinion.

According to Mrs Newman, the Bulk Handling Act was the WA graingrowers' safeguard to maintain ownership and control.

Like the PGA, Mrs Newman believes CBH's pricing structure would encourage "cherry pickers" to set up shop at larger, less expensive mainline segregations.

She said she saw no reason why handling and storage charges couldn't be priced by segregation quantity, which would encourage opposition to smaller high-cost segregations rather than to bulk cheaper mainlines.

CBH has refused to state its position on the suggestion.

CBH CEO Imre Mencshelyi said discussions were ongoing but CBH's present focus was on its proposed merger with GPWA.

Mr Mencshelyi said the Bulk Handling Act was being reviewed by a number of industry groups, but ultimately was a matter for parliament.

"I suggest the Minister would be guided by industry," he said.

"In terms of differential pricing, competition is strong on the east coast, and I understand that they do not differentiate.

"We don't plan to speculate on competitive strategies."

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