Agribusiness

CBH/Arc Infrastructure reach agreement on WA rail access

Grain Central, November 5, 2019

WESTERN Australian grain handler and marketer, CBH Group, and WA rail network operator, Arc Infrastructure, have reached an arbitrated outcome that provides a long-term access agreement to the rail network.

For the past five years, CBH has been working to achieve fair access for grain growers to the rail network.

The new access agreement, which ends at the end of 2026, provides the co-operative long-term access to Western Australia’s Grain Freight Rail Network.

CBH chairman Wally Newman said the objective had always been to achieve a fair price for the level of performance provided so WA grain growers could remain internationally competitive.

“The arbitrated outcome has resulted in our growers being in a better position than if we hadn’t sought access under the Code, resulting in a sustainable, long-term access agreement with minimum performance standards for the grain rail freight network,” he said.

Mr Newman said Tier 3 lines would not be re-opened as part of the arbitrated outcome because of the deterioration of the lines and the capital costs determined by arbitration to re-open them.

“Unfortunately, after years under ‘care and maintenance’ the capital costs associated with re-opening Tier 3 lines, as part of the arbitrated outcome, were substantial and the investment required was simply uneconomical for CBH to accept on behalf of growers as it would have required freight rates to increase significantly,” Mr Newman said.

“While the costs are confidential, due to arbitration obligations, accepting these costs would have significantly impacted the international competitiveness of growers and the entire Western Australian grain industry as a whole.”

CBH chief executive officer Jimmy Wilson said that following the arbitrated outcome, there would be no changes to CBH rail operations, and as already announced at the start of harvest grower freight rates from rail sites have increased partially because of the arbitration outcome.

However, the majority of the increase is related to annual inflation, the crop size forecast to be significantly below average and the uncertainty around fuel prices.

“In order to avoid a repeat of our experience, CBH will continue to engage in the State Government’s review of the Railways Access Code and push for substantial and immediate changes, with the objective of gaining reasonable access prices, greater transparency and more appropriate timelines for decisions,” Mr Wilson said.

“CBH will also continue to drive for fundamental changes to the Western Australian transport landscape in an effort to maximise tonnes we move on rail and to ensure we have the least cost pathway to export markets, keeping our growers internationally competitive and in support of our regional communities.”

WAFarmers welcomes announcement

WAFarmers ,president, Rhys Turton welcomed the outcome saying it was a positive result following a long and arduous process.

“CBH have received an outcome that will provide certainty and security well into the future for West Australian grain growers,” he said.

“The outcome will allow CBH to confidently invest in the grain receival network and position the cooperative well into the future.

“While the outcome regarding Tier 3 rail lines is disappointing at this time, it was clearly an economic decision not to invest in the degraded Tier 3 lines, this will be the best overall decision for growers in the long-term.

“At a time when grain growers are faced with significant international competitiveness, it is imperative the CBH network remain at a minimum cost pathway from site to port.

“Today’s outcome has brought certainty to both growers and CBH to the long-term use of grain on rail in WA.

“Given the position is clear on Tier 3 rail, it is now imperative that state and federal governments ramp up their expenditure on Western Australia’s wheatbelt and regional road network for the safety our of regional communities.”

Sources: CBH, WAFarmers

 

 

 

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