CBH's cut-price auction

30 Apr, 2010 02:00 AM
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WHEN CBH’s shipping allocation auction system was launched last year, the company’s logistics manager Tim Collins said the system would a be a fair and transparent means of allotting shipping capacity from its ports.

He said the auctions had been designed to ensure equitable and transparent allocation of shipping capacity when demand exceeds supply.

“It has proven to be an effective means to allocate port capacity fairly, especially given such high demand,” he said.

However, the Australian Grain Exporters Association (AGEA) has given the system the thumbs down, labeling it an ineffective mechanism for allocation of capacity.

In its reply to the Productivity Commission (PC) draft report on the wheat marketing arrangement, the AGEA said the auction system did not manage infrastructure effectively, was high cost and masked market signals.

It said the system gave CBH an unfair advantage by effectively allowing CBH to operate a "risk free" logistics operation, with fixed costs, variable costs and margins covered and prepaid by the auction system.

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READER COMMENTS

bazza
30/04/2010 2:25:12 PM, on Farm Weekly

If things are so bad why doesn't the AGEA set up export facilities and compete with existing operators? They were the ones who said everything would be better if they got their way via deregulation. Unfortunately they were only thinking of their own opportunities and profit without considering the growers or their orderly marketing systems. Now they need to consider their competitive position and either compete or withdraw. Greed and short-sightedness often go hand in hand.

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