Growers meetings vote against AGC plan

Xavier Martin delivered the considerations last week meetings organised by WAFarmers, which addressed the Australian Grains Champion's (AGC) corporatisation restructure for CBH.

AGC directors were at the meetings, which were held at Newdegate, Kulin and Cranbrook.

Mr Martin, from near Gunnedah, outlined his experience as a winter and summer crop grower, user of the Grain Corp network and former AWB director.

"I think the key thing that growers are beginning to think through and are grappling with is, what would be the real cost of losing their co-operative connection between their farm and their customer?" Mr Martin said.

"That's what they're thinking through.

"They can see all the dollars and representations that AGC have made about the proposal and other speculation, but they're not spending a lot of time on that.

"The thing they're reviewing in their own minds is 'what does it mean for my farm and my family if shareholders are running a corporation between the farm gate and the customer?'.

"They're asking what's the difference between that and the co-operative looking after its members?"

Mr Martin began receiving contact from growers in WA when the AGC proposal went public last month and said because of ongoing conversations in his wider network, he offered to meet with WA growers.

Newdegate grower Bob Iffla chaired several of the meetings where Mr Martin spoke and said much of the grower sentiment centred on retaining CBH as a co-operative.

"Definitely across this region as time goes on, more and more people see it (the AGC proposal) as trying to be a hostile takeover," Mr Iffla said.

"It was valuable to have Xavier attend and talk about how a corporate system affects him as a grower."

Mr Iffla said close to 100 people attended the two meetings he chaired and two motions were supported by all but a few attendees.

At Newdegate, growers moved "this meeting of grain growers requires it to be known to grain traders, corporate grain marketers, the Australian Grains Champions, GrainCorp, the media and the Australian governments that CBH is not for sale now or in the forseeable future".

"This matter is firmly in growers' control and therefore AGC should withdraw immediately," the motion read.

Similarly, at Kulin the meeting moved "this meeting of grain growers at Kulin makes it known that the co-operative CBH is not for sale".

"This needs to be translated to Australian Grains Champions, corporate grain marketers (GrainCorp), grain traders, State and federal governments and the media that CBH is not for sale today, tomorrow or in the forseeable future," it said.

"CBH is in growers' control and the proposal by AGC should be withdrawn forthwith."

Mr Iffla said many attendees welcomed news of CBH's internal review.

He said while he did not support the AGC proposal, it had spurred CBH into action to speak to growers about its structure and to take feedback.

Mr Martin said the focus of his talks at the meetings went beyond supply chain costs, as these were easily visible with WA growers having a $20 advantage on average over their eastern coast counterparts.

Instead, he said growers should be making decisions about a new WA environment based on the behaviours of a corporation versus a co-operative.

"I think any reasonable observer would see that a corporation with a fixation on maximising returns to shareholders will make sure any site that opens has the least possible airspace left at the end of harvest," he said.

"Whereas any entity not driven by an external shareholder imperative, such as a co-op to service members, is going to be much more likely to say what do members want to get safely and efficiently through harvest?

"There's a point of consideration here, shareholder expectation or member expectation of a good service."

Meanwhile, AGC has continued to complete its planned grower meetings and is reluctant to detail its future plans.

AGC directors Brad Jones and Clancy Michael and finance director John Corbett answered questions at meetings they attended.

Mr Jones said while it was clear those at the meetings did not support the AGC proposal, he believed it was worthwhile attending.

"I wouldn't place too much credibility on the reported numbers on the pre-ordained motion from the floor," he said.

"The conversations we had over cups of coffee at the end of the meeting and the feedback we have received at our own information sessions have been much more valuable and insightful."

In response to concerns over storage and handling charges under a corporate entity, Mr Michael said a corporate structure was no barrier to keeping charges under control.

He reported an analysis of storage and handling fee increases found that since deregulation in 2010 GrainCorp's storage and handling fees had increased by 15.4 per cent, compared to a CPI increase of 15pc over that time.

AGC has pledged to retain any increases to CPI for the first five years under its proposal, a factor growers were pleased with but they had concerns about increases beyond the five year control line.

"GrainCorp's storage and handling fees have increased in line with inflation over the past six years since export deregulation," Mr Michael said.

"That's compelling evidence that contradicts this outdated notion that because a company has shareholders its fees will rise at a much faster rate than CPI.

"Australian Grains Champion is acutely aware that we need to keep storage and handling prices low so that growers continue to use CBH's storage and handling services.

"We want to deliver returns to shareholders through growth, not raising charges."