Growers digesting CBH proposal

24 Feb, 2016 01:00 AM
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PGA Western Graingrowers chairman Gary McGill is in favour of the proposal to corporatise CBH
PGA Western Graingrowers chairman Gary McGill is in favour of the proposal to corporatise CBH

AT THIS stage, major farmer organisations are still digesting the particulars of the Australian Grain Champions (AGC) proposal to corporatise CBH, but it is expected they will follow previously established positions on commercialisation of the co-operative.

The two major farmer groups in Western Australia, WAFarmers and the Pastoralists and Graziers Association (PGA) have differing opinions on CBH.

WAFarmers are in favour of retaining the co-operative while PGA is fierce proponents of corporatisation.

Duncan Young, president of WAFarmers’ grains section, said his committee would take some time to look over this proposal.

“We do not have an official stance on the proposal as yet. It is prudent to look through the details of AGC’s plan and make an informed decision then,” Mr Young said.

He said WAFarmers had a policy of supporting the co-op model, but added that the committee needed to look at the AGC proposal before dismissing it out of hand.

“It’s only right to look at the proposal before forming your opinion.”

PGA Western Graingrowers committee chairman Gary McGill was far more forthright about his organisation’s position.

“We are very supportive of the proposal, for the health of the WA grains industry it needs to happen as soon as possible,” Mr McGill said.

“Our official policy has been the same for the past 16 years, we want to see CBH commercialised.”

“We think the release of equity is a fantastic thing for growers, while we also feel culturally, the blind support of the co-op from some growers does not fit what is happening in the industry today.”

Mr McGill said he believed a corporate entity would be best placed to operate in the deregulated environment.

“There is competition already and the co-operative model is just not nimble enough to work in this space.

“I don’t think growers lose anything by handing over ‘control’ of the business, it will still need to compete for our tonnes to survive, I am not worried about the ownership structure.”

On the national front, Grain Producers Australia (GPA) chairman Andrew Weidemann said fundamentally WA growers had one key question.

“They have to weigh up whether the value of the added equity both for themselves and for the CBH business is worth more than having control in the company.”

He said growers would also be carefully looking at whether the proposal would lower their storage and handling costs.

“They will look at what the changes mean to their own business.”

Mr Weidemann said farmers in other states were watching on with interest.

“Patriotically it would be nice to see a big Australian grains business and east coast growers will be pleased to see further drought proofing of the GrainCorp business (who have will have a stake in the CBH business under the AGC proposal), but it is a decision for WA growers.

“They will also have to think about the potential of the business to change hands, as has happened in other Australian states.”

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FarmOnline
Gregor Heard

Gregor Heard

is the national grains writer for Fairfax Agricultural Media
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READER COMMENTS

Jock Munro
24/02/2016 4:07:34 AM

As Minister for Agriculture Barnaby Joyce said to WA growers - privatise at your peril. Putting CBH on the market and then expecting the same service is a crazy notion-you cannot sell something and then expect the benefits that ownership provided. WA growers should come to the East and see the mess that Graincorp have made of their operation.
robinj
24/02/2016 6:01:49 AM

if grain farmers privatise be it at there peril, ll the that have done so have had short term gain for long time pain,,, be wise think long and hard as if priatised look where your money will go ....
Consolidated
24/02/2016 8:47:40 AM

This is a great offer when you look at the details behind it. It is largely a share based offer and this company will be a top 100 ASX. Personally I will be buying more on market. To Munro and all the usual muckrakers, you gave your Graincorp shares away because you didn't value your company. CBH shareholders are much wiser than that. This is the next Wesfarmers, you can pencil it in. It is the only way to galvanise grower loyalty because at the moment growers close to port are leaving the ranks, madly building silos.
cocky
24/02/2016 10:28:54 AM

Strange, other coop's seem to be doing well even in this environment, CBH needs a big muck out or time to move on.
X
24/02/2016 12:03:38 PM

The best outcome probably is in the middle. The CBH Board need to look at a new generation trading structure to allow some free up of capital and a fairer representation model.It would appear that growers do not have the appetite to corprortise but are not happy with the strategic direction and leadership from the current Board Hopefully the AGC offer will wake the CBH Board up!
mid size grower
24/02/2016 12:48:28 PM

I was at yesterday's presentation by AGC and it was brilliantl. It ticks all the boxes for me as a mid size grower and I congratulate the drivers of this initiative. If I wasn’t convinced before the meeting I am now. I encourage growers to get on the AGC website and show your support by pressing the support button.
Philip Downie
24/02/2016 1:03:53 PM

When you corporatize you loose control and then the Directors are obligated by law to do the best for shareholders not suppliers. You end up with all these non ag. directors who are about returns on capital, not service to suppliers. Happened to AWB and Graincorp will happen to CBH, plus it can be sold to whomever the Govt gives the green light to.
Kanzi
25/02/2016 12:49:35 PM

Its the same old story, once the lid on the cookie jar is a bit loose, some greedy individuals will scramble for anything inside. 5 years ago, before a single tonne of the present to be counted tonnes was delivered, CBH had substantial value, built by a legacy of farmers who accepted that the coop way was the future. To be fair, return the value of CBH to those who created that value, not just those with their hands in the cookie jar. It won't happen of course, due to human greed and short term stupid thinking. There are thriving coops around the world which thrive and boom.
Jock Munro
25/02/2016 1:40:27 PM

There is no middle x- once you move away from a true co op structure there is no return and the corporates will ensure that full corperatisation takes place. You have been warned by Minister Joyce- if you are unsure of his advice jump on a plane and check out the mess in the Eastern States.
Jock muckro
26/02/2016 8:12:03 AM

You can always buy your shares back Jocky Boy if storage and handling is such a profitable game. Take control mate. Or is it easier to sit and type?
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