Neil Wandel slams CBH

29 Jan, 2016 09:21 AM
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Former CBH chairman Neil Wandel has made his views heard on the direction of the co-operative amid much debate about the structure of the business.
Former CBH chairman Neil Wandel has made his views heard on the direction of the co-operative amid much debate about the structure of the business.

FORMER Chairman Neil Wandel has slammed the current CBH Board saying it lacks strategic vision and must reconsider its co-operative structure and current direction which fails to address mounting competitive pressures.

Mr Wandel has been relatively tight-lipped since stepping down as CBH Chair in August 2014 and being replaced by Wally Newman who has led a long-term grass roots fight to retain CBH’s co-op structure and principles.

But with the co-operative model now being challenged by the Australian Grains Champion’s (AGC) corporatisation proposal – where growers could potentially claim up to $500,000 for their $2 share – the immediate past Chair launched a stunning attack on ABC Radio yesterday.

Asked how he rated the current CBH board, Mr Wandel said “Not very high, at the moment”.

“I think they’ve taken their eye off the big picture,” the Esperance grower said.

“I really can’t see much vision or strategy of where they think CBH is going to be in the next 10 years.

“There’s some things that I tried to get through (when Chair) and never got the numbers and lost but if you get outvoted at the board you’ve got to accept the decision.”

Mr Wandel expressed concerns about CBH diversifying into fuel, fertiliser and finance products for growers saying he was unsure if enough profit margin, existed in those activities,.

“There’s a lot of disillusion out there amongst the bigger growers at the moment,” he said.

“The trouble is the 250 growers who probably grow a quarter of the grain and deliver to CBH really don’t have much say anymore.

“We’ve dropped so many numbers and from what I can gather, it’s some of these bigger growers who are really looking for change.”

Mr Wandel said he was asked to get involved about six to nine months ago in the AGC’s campaign for structural change, but declined the offer as he thought it would be inappropriate to accept, as an immediate past Chair.

But he said he also didn’t “know anything” about the ambitious proposal involving other ex-CBH directors and was keen to learn more.

Mr Wandel said, in today’s environment “we need to look at any proposal that comes through for CBH”.

“The co-operative model has served the group well but is it going to continue to serve it into the future?” he said.

Mr Wandel questioned whether the CBH Board would actually present any formal proposal from the AGC, back to growers for consideration.

But if a formal proposal was made by AGC, he said the current Board would not give it “much serious consideration at all” unless it was “within the co-operative principles”.

Mr Wandel also criticised the capacity of current grower Board members – which he didn’t name – suggesting they were motivated by the “lifestyle” they gained from the role and would only “look after their own jobs” in making any assessment.

“I should imagine whatever proposal comes through from the new mob that not too many of these current directors would be taken through on the new board,” he said.

With CBH’s annual grower-director elections currently in full swing, Mr Wandel said the co-op’s inability to rationalise its storage and handling network was “ridiculous” and linked to polling outcomes.

“My understanding and this is only a rumour that the board were really slow on signing off on any change to the network strategy because it feels they’re not going to make any serious announcement until after this next election because the directors wanted to get re-elected,” he said.

“There has to be some rationalisation across the sites – it’s just ridiculous.

“You get a zone like Esperance which has 10-sites and the port and takes two and a half million tonnes and then you get other areas that take double that with 100 sites.

“I see one director saying that no grower should cart more than 40kms to a bin.

“Well if he’s going to follow through that in Esperance he’ll be building bins which is just ridiculous.

“Esperance growers I speak to don’t want that – they don’t want to be charged extra for storage and handling and cross subsidise somewhere else.”

Mr Wandel said some larger growers he’d spoken to and Esperance growers were “disillusioned” with the CBH Board’s direction at the moment.

He also expressed concerns about a 7 per cent pay-rise in executive salaries that’s under consideration.

The current payment was worth about $100,000 per year “plus there’s a lot of other benefits that aren’t mentioned in the fee”, he said.

Mr Wandel said he didn’t know what individual directors’ incomes were and whether a large percentage of that income was derived from their CBH director’s position.

“I don’t know what peoples’ personal incomes are,” he said.

But Mr Wandel said many co-ops in England ensured directors had substantial incomes, outside of their fees, to be eligible to sit on the board.

He said the wording of the proposal to increase director fees – equating to $1.2 million in total per annum for the Board - was “worded quite subtly” in voting papers and “actually reads like its 3.3pc but is actually close to 7pc”.

“I think the growers will probably just tick off and accept it,” he said.

With the ABC Radio presenter making a suggestion of a link between the proposed increase in director fees and an 8pc increase in network and storage charges this year, Mr Wandel laughed.

He said he was unsure if CBH was sustainable under the current co-operative model in the long term “with competition and stuff”.

“Unless they make radical changes I’m not quite sure it’s going to be sustainable,” he said.

“I might be wrong – they might have something hidden there – but I don’t think they’re responding to competition enough.”

Mr Wandel said if a competitor started taking grain out of the CBH network in the Esperance and Geraldton zones, with 3-4mt “quite likely” in the next couple of years, it would eat away at the company’s bottom line, as Bunge has with its Bunbury port facility.

He said most growers say they support the co-operative structure “and I think most people do” but if a competitor offered them $5 per tonne cheaper and they delivered 20,000t or 15,000t of grain “it’s a lot of money”.

“I’m just sitting back as a farmer now and watching what’s happening,” he said.

“There’s a lot of hype in this election – I hope growers look past that and looking this time perhaps to have a bit of change in some areas and get some fresh blood in there.”

Mr Wandel said if the current batch of grower-directors were re-elected this year – the CBH board still needed to sit down and work out its future direction or else “these offers will keep coming”.

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Colin Bettles

Colin Bettles

is the national political writer for Fairfax Agricultural Media
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READER COMMENTS

andrew sachse
30/01/2016 3:44:51 AM, on Farm Weekly

if the big guys are really that and not money spinners for the banks then you would think that they could market there own grain and not stiff the the family farmers. I delivered my first truck load of grain in 78 and paid tolls to help get this company where it is today and I'm sure there are those that have since left farming that are far more entitled to the equity then these trouble makers with there own adgenders. If you want privatization fine ask for your $1 back and see how you go against the co-op
Deregul8
30/01/2016 8:52:22 AM, on Farm Weekly

There is clearly a cultural problem within the CBH board where it is easier to tow the line rather than stand up for what is right for the future of the company. Neil is not the first ex director to find his voice once out of the ranks. Very disappointing. Of course, the problem is that directors are elected for making politically popular, motherhood statements rather than on their ability to run a multi billion dollar company. Just shifting voting rights to tonnage based would have a profound positive impact on CBH. This 75% shareholder majority is bringing the company to its knees.
Consolidated
3/02/2016 9:18:31 AM, on Farm Weekly

What you are really saying Sashy is you want us wealthy farmers in the Western Districts to continue subsidizing your existence out there around Bencubbin. One small question, what benefit do the western growers get for keeping your freight charges cheap? Higher costs for one. That's why we are madly building silos and leaving the tier 3 to you mob.

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COMMENTS

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Forward selling grain is always a risky proposition and we are now seeing further evidence of
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So it would appear that we'd have an ex AG bureaucrat ?( no disrespect ) leading AG in WA Let's
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Should have been appointed instead of Nalder in the first place