western australia after deregulation: the cbh perspective · deregulation –price discovery more...
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Western Australia after deregulation:
the CBH perspectiveFriday, 22nd July 2011
Deregulation – CBH Group perspective
A Co-operative - Impact on grower members
CBH Group – Deregulation initiatives and issues still to face
� Storage, handling and logistics
� Marketing
� Regulation, deregulation and re-regulation?
Storage & Logistics
Deregulation implications
� Only 2 customers were obliged contractually to use rail.
� Leakage from rail system to road growing markedly.
� Different transport resources were being presented at sites.
� In large harvest years CBH couldn’t guarantee access to transport
resources for all customers.
� Transport resources were not being maximised - increasing
environmental damage & safety concerns on country roads.
� Multiple site access – added cost of cargo accumulation
� Break fumigation protocols and increased costs of refumigation pushed
back to the customer.
Logistics – Grain Express solution
Grain Express objectives:
� Streamline grower receivals.
� Provide growers with full and flexible marketing options.
� Virtual grain deliveries – acquirers buy at all 197 receival points.
� Secure investment and encourage better utilisation of the transport
network.
� Minimisation of freight charges.
� Lower supply chain costs – provision of single acquisition, storage,
transport and port loading services to all acquirers at a uniform price.
� Remove supply chain “chaos”.
Grain Logistics – WA Rail network
WA Network 2010 WA Future Network Proposed
Tier 3 rail network
Loss of the Tier 3 rail network in WA
� Increasing damage to roads
� Conflicts between industry and local communities – traffic
� Increased road transport impacts in Metropolitan districts
� Additional capital needs at receival points – road outturns
conflicting with growers deliveries
� The environmental foot print will increase due to additional
road usage
– Trains are 5 times more environmentally efficient
� Increasing freight costs to growers
Linking growers to customers – Export marketing
Export marketing on behalf of the WA grower
� Technical focus, managing quality
– not just the sale of grain
� Provide industry technical support, without external funding
� Have provided an industry good function in export markets
for WA grain since deregulation
� Provision of traceability for customers back through the
supply chain.
How is deregulation working?More choice
2010/11
Deregulation – Education essential
More choice, more advice
� Business relationship manager network throughout WA.
� 80 consultants/advisors now operating in WA
(around 20 companies).
� Business management consultants also moving into market
advice.
� Top 10 WA grain marketing advisors manage
2 – 3 million tonnes
Deregulation – Price discovery
More transparency� CBH Grain pools are independently audited with direct governance
oversight by grower Directors
� Information is freely available on market movements and global SnD’s.
Growers can and will make decisions faster than before.
Track market has become more liquid� Players are operating in different spheres to provide multiple points of
liquidity to all market participants:
- FOB or direct grower accumulation
East-West differential?� Difficult to attribute to deregulation
� WA premium re-established reflecting freight/logistics benefits and
prices based on export parity in most years
Regulation to Deregulation
Consolidation of the Australian Grain IndustryWhat’s next?
#1063841
1985 1990 1995 2000 2005 2009 20112010
Grain Elevators Board Victoria
Grain Handling Authority NSW
NSW Barley Board
NSW Oats Marketing Board
NSW Sorghum Board
NSW Oilseeds Board
Cent Queensland Sorghum Board
State Wheat Board (Queensland)
Queensland Barley Board
Bulk Grains Queensland
SACBH
Australian Barley Board
Grain Pool Pty Ltd
CBHWA
AWB
No. of Organisations
Vicgrain
GrainCorp
1992 GrainCorp
1999
GrainCorp
2003 2009 acquired UMH
NSW GB
1991
Grainco
2000
BPT Joint Venture
Grainco
HANDLER
MARKETER
RETAILER
Ausbulk
2000
ABA Joint Venture
1999
ABB Ltd
2009
Viterra/ABB
1999
ABB Grain Ltd
CBH / Grain Pool
20022001 GA Alliance
AWB Ltd
1999
AWB Ltd
2002
Landmark
Cargill
Agrium
15 9 7 6
Elders Elders
Toepfer
GrainCorp
Viterra
CBH
Elders
?
Adapted from: JP Morgan/Kronos
1985 1990 1995 2000 2005 2009 20112010
Grain Elevators Board VictoriaGrain Elevators Board Victoria
Grain Handling Authority NSWGrain Handling Authority NSW
NSW Barley Board
NSW Oats Marketing Board
NSW Sorghum Board
NSW Oilseeds Board
NSW Barley Board
NSW Oats Marketing Board
NSW Sorghum Board
NSW Oilseeds Board
Cent Queensland Sorghum Board
State Wheat Board (Queensland)
Queensland Barley Board
Cent Queensland Sorghum Board
State Wheat Board (Queensland)
Queensland Barley Board
Bulk Grains QueenslandBulk Grains Queensland
SACBHSACBH
Australian Barley BoardAustralian Barley Board
Grain Pool Pty LtdGrain Pool Pty Ltd
CBHWACBHWA
AWBAWB
No. of Organisations
VicgrainVicgrain
GrainCorpGrainCorp
1992 GrainCorpGrainCorp
1999
GrainCorpGrainCorp
2003 2009 acquired UMH
NSW GBNSW GB
1991
GraincoGrainco
2000
BPT Joint Venture
GraincoGrainco
HANDLER
MARKETER
RETAILER
HANDLER
MARKETER
RETAILER
AusbulkAusbulk
2000
ABA Joint Venture
1999
ABB LtdABB Ltd
2009
Viterra/ABBViterra/ABB
1999
ABB Grain LtdABB Grain Ltd
CBH / Grain PoolCBH / Grain Pool
20022001 GA Alliance
AWB LtdAWB Ltd
1999
AWB LtdAWB Ltd
2002
LandmarkLandmark
CargillCargill
AgriumAgrium
15 9 7 6
EldersElders EldersElders
ToepferToepfer
GrainCorpGrainCorp
ViterraViterra
CBHCBH
EldersElders
?
Adapted from: JP Morgan/Kronos
Deregulation or re-regulation
Port access undertakings submitted to ACCC for 2011/12 harvest� GrainCorp� Viterra� CBH
Re-regulation of Australian grain ports imposed by WEMA 2008 access requirement:� Increased costs and decreased flexibility associated with grain
ports� Differential treatment between port operators – not all grain
ports in Australia are regulated
Grain Express revocation by ACCC� CBH appeal pending
Western Australia after deregulation:
the CBH perspectiveFriday, 22nd July 2011