CBH targets 100 bins in major upgrade

24 Mar, 2016 01:00 AM
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CBH chief executive director Andy Crane has revealed to growers that only 100 of its 202 grain receival and accumulation sites will be funded into the future with the remainder phased out over three, five and 10 years.
CBH chief executive director Andy Crane has revealed to growers that only 100 of its 202 grain receival and accumulation sites will be funded into the future with the remainder phased out over three, five and 10 years.

FUTURE investment by CBH Group in its WA grain receivals and accumulation sites network will target 100 of its current 202 sites.

The other 102 sites, some with concrete silos dating back to the 1960s, will be phased out over three, five and 10-year periods.

But, at this stage, CBH "intends to retain the footprint", CBH chief executive officer Dr Andy Crane said.

Discussions will be initiated with local councils and other potential site users towards the end of the phase-out periods for individual sites.

A $750 million five-year plan will focus on improving rapid receival and out-loading to port facilities at the targeted 100 sites as CBH concentrates efforts to get grain to international markets in the first six months of the year.

The future shape of the network beyond 10 years is being revealed to growers at a series of 22 meetings, which started at Northam last Friday.

The meetings continued this week in the Geraldton Port zone at Northampton and Mingenew on Tuesday and Perenjori and Coorow yesterday.

Conducted by local CBH directors with Dr Crane and operations manager David Capper presenting the information, they will continue next Wednesday at Miling and Wongan Hills, on Thursday at Koorda and Mukinbudin and on Friday at Merredin and Cunderdin.

The meetings round is scheduled to conclude at Esperance on April 15.

A more detailed explanation of the reason CBH's board rejected the corporatisation overture from Australian Grains Champion (AGC) is also being provided to growers at the meetings.

They are part of a proposed six-month consultation process announced by CBH last week on the future of the co-operative's structure and strategy for its network.

CBH hopes to produce an interim report on the structure options, including a corporatised option, by September 30, about the time AGC had hoped to be finalising its GrainCorp-backed proposal for listing CBH as a public company.

A decision by the CBH board on the future structure of the organisation is not expected until next year.

Dr Crane confirmed on Monday that decision "may involve a vote of grower members" if the recommended proposal requires a change to the CBH constitution.

He said the network strategy was being "well received" and growers attending the meetings were "very engaged" on the issue of the AGC proposal.

"They are certainly much more aware of the detail, the implications and the board's reasoning in relation to AGC," he said.

Dr Crane said CBH did not want to release the list of 100 receival sites to benefit from the $750m, five-year plan to reshape its grain storage and handling network until after the grower meetings.

"We've put the 100 sites that will receive capital and maintenance expenditure up at the meetings," Dr Crane said.

"We've previously talked about cost savings and productivity improvements and there's been lots of work undertaken.

"The network strategy is based on grain flow and the age of the sites.

"Growers understand the need for consolidation of the network.

"They know the sites that will close.

"They've been saying to us for some time now, give us some certainty so we can plan ahead.

"That's what we are doing at these meetings."

Dr Crane said the future network 100 sites handled more than 90 per cent of the annual harvest.

Dr Crane said the network strategy had three aims - to keep costs and therefore growers' fees low, improve site efficiency and grower turn-around times, and speed up out-loading to port.

Some of the proposed $750m would not go into building network capacity but instead into improving grower delivery and road and rail out-loading facilities at sites, he said.

Dr Crane declined to indicate whether small sites on closed Tier 3 grain rail lines topped the list of sites scheduled to be phased out.

"The strategy is not rail based," he said.

In negotiations with Brookfield Rail over a long-term access agreement for its grain trains, CBH had indicated it does not require the Merredin-Trayning and York-Quairading lines reopened which may indicate the Kununoppin and Nukarni sites and Greenhills and Mawson sites have three years left.

Last week, announcing that the network strategy would be discussed at grower meetings, Dr Crane said the plan was to "deliver a low cost, efficient grain supply chain and increased tonnes to port when our exporters need it".

"After two years of analysis, looking at supply chain optimisation, asset management and an engineering review, we have found cost efficiencies along the way and are in a position to share with growers the details of this plan.

"For decades CBH has delivered real value to WA grain growers and we want to ensure we deliver growth for generations to come."

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FarmWeekly
Mal Gill

Mal Gill

is wool and dairy writer for Farm Weekly
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READER COMMENTS

X
24/03/2016 8:18:31 PM, on Farm Weekly

Great to finally see some action regarding network rationalisation, just 10 years too late!!
Consolidated
26/03/2016 5:55:37 AM, on Farm Weekly

All it is going to take is for one competitor to open a super site on the standard gauge rail and CBH is buggered. A real shame growers don't see the risk because $3-4 bill of equity is going to evaporate and many of you will get the higher charges anyway as even CBH won't bother chasing scraps with the lowest cost tonnes going to the competition. There simply won't be any ability to cross subsidize.

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