AUSTRALIA- The grain growers’ cooperative CBH Group, has announced it will be cutting storage and handling fees by US$4 for every tonne in the coming harvesting season 2018/19.
These are continued efforts in providing lower cost, efficient grain supply chain for Western Australian growers.
According to Jimmy Wilson, chief executive officer of CBH, the fee reduction will also enhance competition against grains from international supply chains, offered at lower cost.
This comes after CBH’s cost-cutting strategy to save US$100 million through job cuts in the middle of a competition from Black Sea nations such as Russia and Ukraine.
The group claimed the Wheat Port Code, introduced by the competition watchdog may result to increased supply-chain costs and could result to unnecessary regulatory burden to consumers.
“The commencement of a recent program to improve efficiency and reduce costs across our business, as well as CBH’s strong balance sheet, has provided us the confidence to return this value directly to our growers in lower fees, starting this harvest,” said Wilson.
“We know that the international competitiveness of Western Australian grain is under threat from fierce competition from the Black Sea and reducing our supply chain fees and improving efficiency is essential to keep grain growing viable for generations to come.”
As a result of extra regulation and extra costs of producing wheat in Indonesia as compared to Black Sea competitor, pressure on international competitiveness would increase.
“Ultimately all supply chain costs are borne by the grower and we expect to see the full US$4 per tonne value returned to them through reduced receivable fees and competitive pricing for grain,” Mr Wilson said.
“Going forward, CBH will endeavour to keep fees flat as we continue to seek further supply chain efficiencies.”
The US$4-per-tonne reduction will be split evenly between grower and marketer fees to ensure growers have an attractive pathway to get grain to the international market at the lowest cost possible and that grain marketers continue to see Western Australia as an attractive destination to accumulate grain.
He added CBH recently introduced efficiency measures, reduction of operating costs and strong balance sheet, all contributing to lower fees.
CBH also committed US$750m in infrastructure expansion and upgrade with a long term goal of reducing port costs for growers.