Don't let CBH go, says NSW grower

29 Oct, 2010 11:19 AM
Farmer Darrell Jordison (left), Gulargambone, NSW, CBH Geraldton Zone director Rod Madden, CBH deputy chair Wally Newman, NSW Farmers Grains Committee chair Mark Hoskinson, Kikoira, NSW, CBH Kwinana Zone director Kevin Fuchsbichler, CBH Kwinana Zone director Mick McGinniss and NSW Farmers policy advisor Ben Mason, Sydney, NSW, inspect the CBH facitlities at Brookton.
Farmer Darrell Jordison (left), Gulargambone, NSW, CBH Geraldton Zone director Rod Madden, CBH deputy chair Wally Newman, NSW Farmers Grains Committee chair Mark Hoskinson, Kikoira, NSW, CBH Kwinana Zone director Kevin Fuchsbichler, CBH Kwinana Zone director Mick McGinniss and NSW Farmers policy advisor Ben Mason, Sydney, NSW, inspect the CBH facitlities at Brookton.

A GROUP of NSW farmers have told Wheatbelt growers to hold on tightly to CBH operations in WA.

"We're very envious of what you've got over here," NSW Farmers Association Grains Committee chair Mark Hoskinson said.

"WA growers have a very strong presence in all aspects of CBH operations and if there's something I could advise your growers of, it's don't let that go."

On a recent "fact finding mission" to WA Mr Hoskinson toured CBH facilities with fellow NSW farmer Darrell Jordison and NSW Farmers policy advisor Ben Mason, to look at effective technologies being used in the WA grain industry.

They visited the Kwinana port, CBH's Williams and Brookton receival points and the operations at the CBH engineering and fabrication site in Bibra Lake.

"You've only got to look at NSW and what farmers are being charged to get their grain from the paddock to the port," Mr Hoskinson said.

"It costs NSW growers up to $100 a tonne and the dangerously low commodity prices means we just can't afford to stay in business if we continue down that line."

Mr Hoskinson described the NSW grain network as a "logistical nightmare" and said deregulation coupled with aged infrastructure and outdated technology on the back of a 10 year drought had caused all kinds of problems for farmers.

This year alone NSW will have a grain export capacity of six million tonnes compared to WA's yearly forecast of 15-16mt, or about 1.3mt a month.

"In NSW we're dealing with structures that were built when I was a boy and my grandfather started working in 1926 and 1930," Mr Hoskinson said.

"They were designed for horses and wagons originally and two of our headers can keep up with the local silo, at a capacity of 116-120t an hour.

"Following a decent harvest this year we're forecasting a huge carryover of unsold un-priced grain and especially after 10 years of drought we can't afford to have grain sitting around unpriced or unsold.

"We'll see grain storage fill up in the east this harvest.

"We've got a lot of grower storage going up at the moment and a lot of silo bags sitting around in paddocks.

"NSW growers can't afford to have grain sitting around in the paddocks and in the silos if there's a huge spike in the market.

"We need to have it out there ready for sale so somebody like CBH or AWB can take advantage of spikes in the price or the currency.

"If it's sitting in the paddock it's pretty hard to do that.

"We've seen in NSW recently a lot of growers get burnt by trying to hedge their own wheat and we were looking at a billion dollars worth of losses from people trying to do it themselves."

Mr Hoskinson said the strength in marketing was to do it collectively and he believed that unless NSW growers were involved in the supply chain like those in WA, NSW grain wouldn't be marketed efficiently.

"The foresight I've seen in your growers and what they've been developing over the years in looking to the future and building a facility like you've got in Kwinana just leaves our port facilities wanting," he said.

"If we had the facilities that you've got over here we'd get a lot of the grain out but we would still be restricted by our rail networks."

Mr Hoskinson said there wasn't the drive and passion in NSW to provide a good service for grain growers.

"Trains are operating like they were in the 1960s," he said. "The out-loading is no faster than the in-loading basically, the trains are running a milk line and dropping off carriages which are taking a long time to fill and it's just logistically inefficient and uneconomic to keep doing it like that."

He would like to duplicate CBH and its high capacity sites, high in-loading speed, automated weigh bridges and sampling techniques, in NSW.

"The CBH system is far superior to what we've got because it is driven by farmers," Mr Hoskinson said.

"They've been committed, even in the dry years, to putting money into developing and upgrading, whereas we're involved with a shareholder-owned company (GrainCorp) which is focused on putting money into shareholder pockets."

GrainCorp was a statutory body that was bought by a group of forward thinking farmers who wanted to add value to the NSW farming system.

It was set up as shareholder structure, rather than a co-operative like CBH, which allowed corporate investors to say how their returns would be maximised, rather than the returns of the growers.

"The structure was wrong at the start and I'd hate to see anything built again along those same lines," Mr Hoskinson said.

"When we were going to Canberra lobbying for the single desk, (then Federal Agriculture Minister) Tony Burke made it very clear to us that he thought the market needed to be deregulated.

"He said we would have more choice, we would have buyers coming out of our ears with 28 buyers registered right across the country.

"Yet our first big year comes along and we've got two buyers operating because they've got control of the rail.

"So unless you're storing it on-farm or delivering it straight to port, you're been caught short.

"Growers will see the pain and the suffering and I think we'll see a push to do something about it.

"If we go into a good year next year and have back-to-back harvests with a carryover of five million tonnes of grain, farmers will start to realise just what we've lost."

CBH general operations manager Colin Tutt said WA growers should be proud of the WA grains industry and the development of CBH.

"Our visitors were very impressed with our total capabilities and our focus on generating the highest profit possible back to the grower," he said.

CBH deputy chair Wally Newman agreed and said the then CBH chairman Mick Gayfer and his board, made a good decision when they adopted such a flexible durable CBH structure in 1971.

"It has put growers in the enviable position of being the leading Australian grains business owning every inch of a supply chain from the farm gate right through to the mills in Asia," he said.

"It has given WA growers the ability to extract value from the whole length of that supply chain for their sole benefit.

"It's ironic that here in WA we believe our structure still has potential for further innovation to benefit our growers.

"You can't help but feel despair and disappointment in the systems on the east coast after seeing what we have here in the west.

"Fortunately for CBH we are somewhat insulated from the current poor season by the extra work our engineering business is picking up from the east coast and the vision of the board in Alan Watson and Robert Sewell's time to implement a drought-proofing policy."

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29/10/2010 3:26:06 PM, on Farm Weekly

Some one should have asked the Eastern grain growers if the flower mils were a good idea, I personalty would like to know what they thought, more than likely pure bloody envy, Having said that I do also admire the domestic east coast grain market and the ever growing opportunity this represents for NSW farmers.
29/10/2010 8:06:48 PM, on Farm Weekly

Many N.S.W grain growers must be embarrassed by the rationale given by The Chairman of the N.S.W F.A as to why the supply chain in the grains industry in N.S.W is failing. Mr Hoskinson argued that supply chain infrastructure hadn't changed much since his Grandfathers day and whilst this is partly true at least for growers there is some comfort in being able to operate in a modern marketing system. Mr Hoskinson’s reasoning for the infrastructure failure is offtrack {no pun intended}. Unfortunately Mr Hoskinson still dreams of utopian days in the collective, I would like to advise Mr Hoskinson that the vast majority of wheat growers in N.S.W have willingly left the collective and now with the monkey off their back and with the vast array of marketing tools being offered to them by many companies have moved on and are adjusting to the new wheat marketing paradigm with great excitement.
30/10/2010 4:49:43 AM, on Farm Weekly

Unfortuneately the continued attack by WA growers on AWB LTD and its charges contributed to the ultimate loss of the single desk. The grains leadership of WA was out of order by fostering a perception that their growers were being ripped off. As good as CBH is,WA growers are suffering significant financial loss without the single desk.
Mark Hoskinson
1/11/2010 4:23:08 AM, on Farm Weekly

If you would like to add some credibility to what you write perhaps you should put your real name to your writing and then I will gladly answer your questions. I am not in the habit of addressing those who hide behind an alias. You could be the Chairman of Graincorp as far as I know. If you want a debate don't hide.
1/11/2010 5:58:05 AM, on Farm Weekly

Speaking of tools Sunburnt!
1/11/2010 9:05:10 AM, on Farm Weekly

Sunburnt, NSW growers reluctantly are making the best of a bad situation with the grain trade now possessed by grain traders who have their own profitability and the returns to shareholders as a priority and not the interests of grain growers or grain consumers, with prices on offer aligned with farm gate returns from the seventies, what we have now in this "brave new world" of corporate enterprise is almost prehistoric. As a once all grain grower we have now diversified into livestock as the average per hectare gross margins from grain falls well behind returns from stock.
diesel head
1/11/2010 11:22:51 AM, on Farm Weekly

No doubt that the wise men from the east are here at the invitation of C.B.H. board with whom they share an anti market anti trade philosophy.C.B.H. are becoming more like the old statutory A.W.B. with everyday that passes.Producers increasingly see C.B.H. as not something to be proud of but as a failing business acting in its own interests in the most shortsighted ways.Soon it will be trusted by no one in the West and adopting the time warped views of Mr Hoskinson will only serve to hasten that outcome.
1/11/2010 1:43:52 PM, on Farm Weekly

Bit hard to see how C B H is ante trade Diesel Head our co op lives on international trade, and this is exactly why the easten state farmers are in the poo this year, Yes they can blame the corporates but most of this century there best market has been domestic hence the build up of ON FARM INFRASTRUCTURE and the decline or stagnation of the grain handlers and rail systems .
Pro Freedom
1/11/2010 1:54:59 PM, on Farm Weekly

Fascinating. Hoskinson equates the bulk handler with the railroad. Is this about corporate versus cooperative structure, or (privileged) monopoly power versus competition? Perhaps NSWFA should have spent less time lobbying against the inevitable end to the Single Desk and more time working positively for the future of infrastructure in their state.
1/11/2010 5:18:40 PM, on Farm Weekly

Why Diesel Head when four letters would have sufficed?!
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