CBH as a co-operative has served its purpose over the past 80-plus years but can't grow to the model WA growers need for the future.
This is the message from the three WA growers driving the Australian Grains Champion (AGC) initiative who revealed their proposal to transition CBH into a commercial entity last week.
Mingenew grower Clancy Michael, Tammin grower Brad Jones and Wongan Hills grower Sue Middleton are behind the movement that has been the topic of focus in the WA grains industry since the news broke last month.
They are backed by former CBH director Samantha Tough and John Corbett.
However, the trio haven't gone public with their plans until last week as they worked through the final stages of their proposal.
Mr Michael said the deregulated environment had made CBH as a co-operative limited in its ability to grow into what the future demands will be of the WA grains industry.
"We have a very different playing field," Mr Michael said.
"Competition is there and the one model and the one pricing doesn't fit all and it now needs to take the next leap for the next 100 years.
"We believe by putting the equity away from the $2 share and putting that equity back into the hands of growers in proportion to what the business has done to this point is really important."
The AGC proposal would list the commercial version of CBH on the ASX and would consequently provide CBH members with up to $1 billion cash through two tranches of a guaranteed $600 million of cash, a further $400m at the time of listing on the ASX and tradeable shares.
It has requested the CBH Board enter into the Process Agreement by Friday, March 18, to commence a course of action that will ultimately result in the proposal being put to a CBH member vote.
To be successful, AGC requires 75 per cent of grower members to vote in support of their proposal.
If CBH members ultimately support the AGC proposal, CBH shareholders would exchange their shares in CBH for a cash payment of $600 million and shares in AGC.
AGC will then list on the ASX, timing subject to regulatory approvals and market conditions.
The initial $600 million cash payment to growers is being funded by key cornerstone investors, GrainCorp and Morrison & Co, managing capital on behalf of underlying Australian superannuation investors.
Mr Jones said the business case for corporatising CBH made sense for both growers and CBH.
"From a business perspective, there's the grower perspective where we're going to be putting value and capital back on their balance sheets," he said.
"So we're going to be making a stronger individual business which will make a really strong industry.
"From a CBH point of view, going into a corporate structure your access to capital from issuing equity from raising capital through avenues such as bond and debt, which is so much easier done in a commercial environment than in the co-operative model."
Ms Middleton has been active in Wheatbelt development for the past 18 years and lists this deal as the most significant in her time.
"We've got no parallel for this, it's bigger than Wesfarmers, this is an extraordinary moment in our history," she said.
"From my perspective we are driven by the desire to see our industry grow and I'm driven by the desire to see strong sustainable regional communities.
"I'm heavily involved in Royalties for Regions and this eclipses anything that Royalties for Regions has ever done during my six years with that program in the Wheatbelt of WA."
The three directors list the unlocking of grower equity, the development of a new CBH which would be the premier grain supply chain servicing paddock to port and to consumer in the Indian Ocean and South East Asian region and a network devoid of grower politics as positives of their proposal.
They cite family future and community future as their motivator and hit back at suggestions they're only in it for personal gain.
"I'm in it for my son and his children," Mr Michael said.
"I'm trying to do this for their future.
"We're not going anywhere and to say we're only in it for ourselves is not right.
"We've done this in the interests of our growers.
"Fourteen months of hard work has not been just for us to profit from."
Key features of the proposal include total storage and handling, transport and port fee increases capped at CPI for five years; the Grower Advisory Council to be elevated to a Grower Council with responsibility to make recommendations to the AGC board; and Future Farming Fund to support community activities, innovation and to support risk mitigation or other grower-driven initiatives to future-proof farming.
The company board will have seven members including two directors with WA agriculture backgrounds, a nominee of GrainCorp, and four other independent directors, including an independent chairman.
Ms Middleton said the future structure of the company was tailored to cater for larger and smaller growers, with the grower involvement through the Grower Council and board key components of the process.
"We've designed the cash and shares that growers will get to benefit smaller growers," she said.
"So 50pc of that pay out is based upon membership and 50pc on what you deliver.
"The thing is if you deliver more tonnes you do build the network."
Ms Middleton stressed there had to be a balance between the two and the group has balanced it in favour of the smaller growers.
"They need to be able to put the money back into their business, potentially look at on farm storage, potential productivity gains from looking at new technology and the stuff that people are really struggling to afford now.
"It's a fairly big contribution to their balance sheet for the smaller growers.
"We laboured this, we said this has got to be a solution for every grower.
"It's been portrayed as larger growers doing something for larger growers but nothing could be further from the truth."
AGC is preparing to present its case to WAFarmers in the next few weeks and at other events across the Wheatbelt.
The directors are also encouraging contact from growers through their website or over the phone.