It's war

21 Aug, 2002 10:00 PM

CBH mans arms against AWB Ltd

Special report by RICK LEE

A WAR is set to break out for control of the grains industry in WA and growers look likely to become casualties.

Negotiations have broken down between AWB Ltd and Co-operative Bulk Handling over the possibility of a joint venture, which would allow the two organisations to share facilities in WA.

AWB Ltd is now believed to be setting up storage and handling facilities, transport networks and port agreements which would put it in direct opposition to CBH.

AWB's huge investments in WA are likely to severely affect the value of CBH, a WA grower-owned co-operative.

The sticking point in the talks between AWB and CBH appears to be the former's demand for part ownership of the WA organisation.

CBH believes WA graingrowers would not agree to relinquish part of the co-operative to AWB but the international marketer has refused to yield.

The WA organisation has also been frustrated by AWB's refusal to work out a long-term service agreement, which would provide CBH with some security.

The "strategic alliance" was to guarantee that CBH-Grain Pool of WA did not encroach on AWB operations and AWB would compete with CBH. CBH wanted a 10-year moratorium.

It is believed AWB has spoken to the port authorities in Esperance, Bunbury, Albany and Geraldton about arrangements to move grain through the country ports and has taken up an option to lease land in at least one of those major country centres.

It is also understood that AWB has employed staff with extensive experience in infrastructure and rail transport to develop storage and handling facilities and transport strategies in WA.

A spokesman for AWB said it was not prepared to reveal details of its operations in WA but was still working towards an agreement with CBH.

"The nature of the discussions are sensitive and we are not going to elborate on them at this stage," the spokesman said.

CBH would not comment on the situation but it is believed that its hierarchy is extremely angry about AWB's push to create an independent supply chain in WA.

It is understood CBH was in favour of an alliance but has re-evaluated its position in the face of AWB's push to set up independently.

If serious negotiations are to resume, it is unlikely to happen until after the CBH-Grain Pool merger is complete and a new board has been chosen.

The deadline for the merger is November 1. Farm Weekly has been told that the new board would not agree to any deal without consulting members.

If AWB persists with its demand for part ownership of CBH, WA growers would have to decide whether to give the national marketer more power or go to war against it.

The conflict could also provide ammunition to opponents of single desk, if growers could be convinced that AWB was abusing its power as Australia's sole international wheat marketer by trying to dominate the WA grains industry.

WAFarmers last week revealed its support for an AWB-CBH alliance but was worried about AWB's "lack of transparency in WA".

WAFarmers grains president Peter Wahlsten, a staunch supporter of single desk, said he was alarmed at the pressure applied by AWB, which had undermined CBH's trust.

Pastoralists and Graziers Assocation grains chairman Leon Bradley said the association did not support single desk or an alliance between AWB and CBH.

"An alliance between AWB and CBH would be the worst of all worlds," Mr Bradley said.

"At best, CBH would be a subsidiary of AWB, which would have more dominance of WA growers.

"It is our preference to have open competition in grains marketing.

"The next best thing would be to have free competition to port."



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