CBH slammed in AWB report

27 Mar, 2008 09:57 AM

THE AWB has urged the Federal Government to make sure the new wheat legislation does not mean a defacto monopoly further down the supply chain because some bulk handlers have an advantage over others.

The board wants a split between operators of export facilities and their marketing arms to prevent a conflict of interest.

While acknowledging this was not possible in the short term, the recommendations of a report prepared by the Allen Consulting Group for the AWB, and obtained by Farm Weekly owners Rural Press, are to split the marketing and bulk handling businesses.

“In the longer term, the most effective means to minimise the potential exploitation of market power by operators of export grain facilities is for formal structural separation of the natural monopoly parts of the business from the competitive areas,” the report concluded.

In the shorter term, the AWB has suggested to the Government that there is the establishment of firm rights for third parties to access monopoly export wheat supply chain infrastructure.

The Government is also called upon to ensure there is equal access throughout the market to price-setting information, such as grain stocks and shipping timetables, and to ensure deals between bulk handlers and grain haulage businesses were above board.

WA-based CBH came under fire for its arrangement with the Australian Railway Group (ARG), the state’s major haulage player. AWB claimed CBH was expected to negotiate an exc

lusive grain haulage contract and said this meant CBH would have gained effective control over the entire export grain supply chain in Western Australia given its control of the up-country storage network and the ports.

The report said that conditions should be put in place to ensure bulk handling companies cannot extend their control over the export grain supply chain through exclusive contracts with haulage services.


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