Farmers brace for freight rate increase as CBH eyes cost recovery amid rising inflation and capital works

Farmers delivering to CBH Group are bracing for hip-pocket pain with the cooperative expected to increase freight rates for the second year in a row to combat rising inflation. Australia’s biggest cooperative is expected to hand down a significant increase in freight rates for the upcoming harvest on October 6 after rates increased by an average of 18 per cent last harvest. CBH charges farmers a rate to deliver to different upcountry grain receival sites across WA, managing the rate on a non-for-profit, cost recovery basis. Rates are calculated based on distance to depot to port, whether transport to port was by road or rail, and the relevant market rates or access agreement for both road and rail. The flagged increase comes as CBH this week revealed it would hand down its 2021-22 results to the year September 30 in early December, and flagged a record surplus for its marketing and trading division and plans to reinvest most of that surplus back into the business. Last year’s freight rate increase — of an average 18 per cent or $2.41 per tonne — worked out to be an average increase of $12,500 for a farmer delivering nearly 5000 tonnes of grain. At the time, CBH’s now chief operating officer Mick Daw said it needed to increase rates to cover rises in underlying road and rail transport costs. Countryman conducted an extensive investigation into CBH’s freight rates last harvest, revealing the cost of delivering grain to some sites surged 71 per cent last harvest. The biggest year-on-year dollar increase was at Jacup — in the Albany Port Zone — where the cost per tonne rose $6.49, from $16.02/t to $22.51/t. The smallest year-on-year dollar increase was at Esperance Port and its satellite site Shark Lake, where the cost rose just 46¢/t — from $1.37/t to $1.83/t. While bins in the Geraldton and Albany Port Zones experienced the biggest percentage increases, it was farmers in the Eastern Wheatbelt who were expected to fork out the most. The most expensive bin to deliver to last harvest was Holleton, for the second year in a row, which increased $4.91/t to cost $37.62/t. The cheapest were Shark Lake and Esperance at $1.83/t. A total of 17 CBH bins cost farmers more than $30/t to deliver grain to last harvest, 12 of which are in the eastern Wheatbelt in CBH’s Kwinana North Port Zone. Bins costing more than $30/t in the Albany Port Zone included East Hyden, south-east Hyden, and Kalgarin. Those in the Kwinana South Port Zone include Ainsworth, Dudinin, Kondinin and Kulin. No bins in the Esperance Port Zone or Geraldton Port Zone cost more than $30/t. The increases came as CBH Group battles make up lost ground after major shipping delays cost CBH more than $17 million in demurrage last financial year.