Australia: CBH Group will introduce "premium" pools for barley

The West Australian's grain market will undergo fundamental change this harvest following confirmation on October 3 that the 50-year-old pooling system for barley will be radically overhauled, according to West Australian Newspapers.

West Australian grain storage and marketing giant CBH Group announced on October 3 it will introduce "premium" pools for barley from this harvest which are expected to pay growers around $15 a tonne more than the traditional pool. The move marks the biggest response yet by CBH subsidiary Grain Pool to the partial deregulation three years ago of its monopoly over WA's $600 million barley, lupin and canola exports.

The premium pools will be open early in October and will close for deliveries as soon as they reach certain tonnages, meaning only growers who commit early will be able to participate. After that, growers will still be able to deliver to the traditional open-ended pool which will continue to take all deliveries as normal for the entire harvest.

But farmers who delay because they want to keep the option open of selling to another buyer have been warned to expect lower prices.

Grain Pool senior trading manager Josh Roberts said it had no choice but to make the move because of the huge volume of special export licences which were being issued to other traders by the Grain Licensing Authority.

That made it much more unpredictable how much grain farmers would deliver into the pooling system, making it more difficult for the pool to lock in optimum prices, foreign exchange and freight to cover the whole pool.

Mr Roberts said the principle of the pooling system which had stood for decades - that growers delivered into "one big bucket" and then shared the proceeds - was no longer workable and was unfair to growers who were loyal to the system. "It's more significant than most people are going to realise at first," he said.

He said the GLA had already issued export permits to private traders for more than 700,000 tonnes of barley for the impending harvest, out of a total expected harvest of 2.1 to 2.2 million tonnes.

The new premium pools will be short-term, fixed tonnage pools. In addition to firm hedging protection, they will have the advantage of being used for the Grain Pool's earliest sales and shipments, which means they also won't bear time-based storage charges or interest charges on payment advances made to growers.

The premium pools will also guarantee a minimum price to growers, meaning growers can benefit from improvements in the market but have no downside risk.

Mr Roberts said the current estimated returns for the premium pools were around $170 to $175 a tonne for feed barley, compared with the $145-150 a tonne for the open-ended traditional pool, and $205 to $210 a tonne for malt barley, compared with $190 to $200 for the traditional pool.

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