WA growers want to know what steps have been taken by CBH to minimise the risk to shareholders in its new alliance with American transport group, Watco Companies.
The CBH Group's recent announcement of its plan to invest $175 million in rail locomotives and wagons hasn't done much to change the minds of its critics.
Some parties are concerned the new partnership between CBH and Watco will only replace one monopoly freight provider (Australian Railroad Group) with another, except this time CBH and its grower shareholders will take the additional risk of injecting significant funds into owning its own rail fleet.
After signing the deal early last week, CBH Group chief executive officer Dr Andrew Crane said the decision to go to tender for the State's rail transport requirement resulted in the introduction of competition for the first time in the WA grain rail freight market and was the first major investment in new rolling stock for over a decade.
He also said the announcement marked a new era for grain rail freight in WA which would deliver significantly greater value, efficiency and safety to grain growers and the industry, but not all growers were convinced.
CBH Group Rail and Road Contracts manager Andrew Mencshelyi said as a grower-owned business CBH was acutely aware of the need to prudently manage risk and protect the long-term interests of its growers.
"The CBH Group successfully manages risk on behalf of growers every day, in the grain marketing products we provide, the seasonal fluctuations we encounter with harvest every year and in managing our other freight contracts to move tonnes to port," Mr Mencshelyi said.
"CBH manages nine road contracts that are tendered on a regular basis, each time the tender occurs there are risks, which through experience and mitigation strategies, are controlled and managed.
"As is the case with any new venture there are risks involved in transitioning to a new rail operator and investing in new rolling stock, however, the CBH Group has successfully assessed, identified and will manage and monitor all risks involved in the project.
"While there are risks with moving to a new rail operator, there were also risks in not seeking an alternative provider, these include financial as well as social risks.
"It's worth noting that CBH was awarded the Grant Thornton Risk Management Award in the 2010 NAB Agribusiness awards in October this year.
"This award demonstrates our ability to develop, document and implement successful risk management processes across the business."
WAFarmers representative and Narembeen grower Bill Cowan said the new partnership between CBH and Watco was fantastic but he could see where the idea of a replacement monopoly had come from.
"It could be viewed as replacing one monopoly with another and I guess we're yet to see if that's how CBH and Watco are going to operate," he said.
"In their old partnership with ARG, CBH let ARG charge exorbitant rates to growers and now it's up to CBH to not let that happen again."
Mr Cowan said that in the past CBH had not been mindful enough of its growers when it came to freight rates.
"It's fabulous that CBH has made the commitment to the freight network, all I hope is that some of that commitment can be shown toward Tier 3 lines too," he said.
"At the moment there are two sets of incompatible rules, more trucks and less trains for the country and less trucks and more trains for the city.
"The new investment is a very big risk and I do worry."
Mr Cowan said CBH needed to be reminded of it's own slogan and if ARG could manipulate CBH on it's prices so easily, what's to say it couldn't be done again.
"In my opinion CBH needs to demonstrate to its growers that the corporate thing has died and that the company's loyalty is really with its growers rather than the heads in the office."
