Reform CBH to help combat future challenges: Watson

24 Mar, 2004 10:00 PM
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CO-OPERATIVE Bulk Handling chairman Allan Watson has issued a challenge to WA graingrowers to back a restructure of the company to help it confront increasing storage and handling competition from eastern states-based companies.

Mr Watson called on the WAFarmers grains section to show some leadership in the issue, and support the company by possibly corporatising and listing it on the stock exchange to increase its market value, and face future challenges in a shrinking national storage and handling industry.

He said of the four remaining major players in the industry, AWB Ltd, GrainCorp, and ABB Grain were public companies and AusBulk was expected to list in July.

Giving his personal opinion before he steps down from CBH's top job next month, Mr Watson said he believed there would only be two or three major players left in the industry in five years' time, and now was the time for CBH to prepare for that future.

"I think there are going to be inevitable further amalgamations and mergers and takeovers within the Australian grains industry, and if you look at all those structures, there are four which are very compatible," Mr Watson said.

"I will never be convinced that as a co-operative, with other major players merging, that you are going to be able to say through our loyalty to our grower-owned and controlled co-operative that we can beat off anyone in that competitive environment."

Mr Watson said he was aware of concerns about corporatising and listing the company, but GrainCorp had listed 10 years and no-one had taken over that company, while AWB had gone from strength to strength since it listed.

He said the eastern states companies were already active in WA and it was naive to think they weren't interested in capturing a bigger slice of Australia's biggest graingrowing state.

"You should look seriously at the fact that as the only cooperative left in the Australian grain industry, the others are not going to sit back and look at the most reliable grain-producing state in Australia and not want some part of it," Mr Watson said.

Mr Watson said he believed CBH's current structure would continue to serve the company well for the next two to four years.

"But my personal view is that is is not sustainable in the long term," he said.

He urged WAFarmers to take an active role in addressing the challenges CBH faced in the future and not rest on its laurels and bask in past glories.

"I believe all these other companies will prepare themselves for the future and I strongly urge you to look at the future and not the past," Mr Watson said.

WAFarmers grains section president Peter Wahlsten said a review would be held to investigate whether a corporate model would provide greater benefits to growers, including tax advantages.

"The review will also compare how other co-operatives and organisations have managed once they have been corporatised," Mr Wahlsten said.

He said CBH's current structure, combined with single desk, protected growers from having outside multinational companies coming in and destroying their business.

"These are just some of the concerns we will need to address if we are to contemplate the corporate model," he said.

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