CBH Group has confirmed it will remain a grower owned and controlled co-operative following the Board’s selection of “Enhanced CBH” as the preferred model for CBH’s future structure.
The decision follows assessment of a full spectrum of models and rigorous evaluation of a short list of three potential co-operative models.
CBH Group chairman Neil Wandel said the “Enhanced” co-operative structure provides the best outcome for WA growers, retaining the most valuable aspects of CBH’s existing structure while allowing new and innovative enhancements to create further value for growers.
“This model truly puts growers at the centre of our business while retaining our valuable tax-exempt status,” Mr Wandel said.
“It gives CBH a sustainable, competitive advantage in a marketplace otherwise crowded by globally-backed competitors driven by the interests of their shareholders, not the long-term interests of WA growers.”
Mr Wandel said Enhanced CBH will fall within the technical definition of a Non-Distributing Co-operative under the new WA Co-operatives Act.
“The enhancements we are exploring under this model include partial refunding of charges to reward growers for their patronage of our storage and handling network, more investment in our storage and handling network and the development and rollout of new products, services and investment instruments that will provide more value to growers and the industry.
“This structure allows us to return value to members in ways that the vast majority have asked from their co-operative. These include keeping storage, handling and freight charges as low as possible and continuous investment in maintaining and upgrading the storage and handling network.
“As a Non-Distributing Co-operative, we will also retain the tax exemption for our storage and handling business – an exemption valued at an estimated $10-15 million in an average year and significantly more in bigger harvest years.“
Mr Wandel said the proposed Enhanced structure would see the introduction of a new and modernised constitution and a transition to the new Western Australian Co-operatives Act, which the Board anticipates putting to a Member vote later in 2011.
“Over the next few months, CBH will be working to ensure this model is ready to implement. We are also planning briefings with our grower members to provide a comprehensive update on CBH’s strategic vision, our new structure and our plans for creating and returning value in the seasons ahead.”
Mr Wandel said the Board was united on the selection of the Enhanced CBH model and confident it would reinforce CBH’s partnership with growers and ensure the co-operative and its members grew stronger together.
Growers and the Board, management and employees of CBH could now move forward with confidence and clarity, knowing the decision was the outcome of an exhaustive investigation which included unprecedented consultation with growers, expert evaluation and lengthy deliberation.
“On behalf of the Board, let me be absolutely clear - CBH is proud to remain a co-operative,” Mr Wandel said.
“Our co-operative model has seen us grow from strength to strength over more than 75 years, reflected in the fact that we are now Australia’s largest co-operative.
“Our research and independent expert advice shows that co-ops can be equally as successful and globally competitive as corporate models, provided they adapt to a changing environment and the different needs of their members. That is what we are doing.
“In the Australian context, there are a number of examples of grain storage, handling and marketing organisations formerly controlled by growers which have gone down the demutualisation and corporatisation path, only to lose their focus on growers and be taken over by multinational companies seeking to provide returns to external shareholders.
“Many growers in Eastern Australia have since commented that they are envious of the services and value provided to growers in WA by CBH, the only remaining grain organisation owned by growers and which has their interests at heart.”