Looking for that CBH dime

06 Apr, 2013 01:00 AM
Comments
22
 
Bill Crabtree.
Bill Crabtree.

KEN Wilson was right to suggest things are tough in the bush.

Times are hard, right here, right now!

WA farmers are again experiencing similar weather to the dirty 30's. I have plotted the last 13 years and it shows that seven of these years have had a decile 1-2 rainfall for April to September inclusive, in our grain growing regions, bar just a few pockets.

This is outstanding weather, for all the wrong reasons.

Amazingly, our farmers have survived well to this point.

They are smart and have mostly adopted the best farming technology possible.

These include; no-till, herbicides, liming, stubble retention, liquid N, dry sowing, precise placement, cautious grazing, efficient machinery, GPS tools and judicious use of fertilisers.

Consequently, they have not experienced the devastation of the dust bowl, not yet anyway.

However, there is real pain, and sustained pain will cause mental issues if hope is not clearly visible soon.

It reminds me of John Williamson's song Galleries of Pink Galahs' where he sings; "Boy leaves home to make a crust, fathers' dreams reduced to dust, but he must go on."

As a real farmer myself, in a dry region, I know that it takes a lot of courage and heart to put a crop in the ground dry.

I admire all farmers that have a go and put their money on the line each year in low rainfall areas.

As a person who believes in free markets I am not keen on big government interference or hand-outs.

This often creates mischief! Smart opportunists get more than their fair share and the needy can get slim pickings, while the taxpayer picks up the bill.

I can't see how crop insurance can help in the private model.

If it made money then it would work and we would have it already.

But, for it to work the premiums would have to be high, too high, or we would have to force people in safe farming areas to fork out insurance that they might not want.

As a consultant, I have had about half a dozen clients retire early from farming in the last two years.

It seems they probably did the right thing.

Interestingly, none of them have handed the baton of farming on, with both its risks and opportunities.

These farms are now leased or have been purchased.

These youngish retired farmers have walked away without any shares of significance from CBH.

Some of them feel that they have missed an opportunity and I can sympathise with this thought.

The CBH issue is of no great concern to me personally, as I am content to farm for a while yet.

With CBH remaining as it is, I will get benefits, like; my grain handling costs will remain low, grain handling is straightforward and I will likely get a loyalty payment.

But the issue, for the wider community, is about fairness. Is it fair for a farmer to work his whole life building an efficient co-operative, a bit like Wesfarmers, and then walk away with nothing at the end and with no son to pick up the residual benefit?

Apparently, there are about 450 WA farmers (10 per cent) in the Wheatbelt this year who will not receive their normal carry-on finance.

Many farmers have seen their equity drop from 80pc to 50pc over the last three seasons.

Is it fair for them to walk off their land with almost nothing, even though they have fought the good farming fight bravely and in exceptional circumstances?

I am sure we all have friends in this category, sadly!

It is interesting to have contact with farmers who have, all their life, been conservative and thought that CBH should never be sold.

Now that they are out of farming, they feel a bit left out, wondering what to do, is it fair, do they just let their $2 share go?

If we were in their position would we consider that to be fair?

It is interesting to note that the CBH Board is now dominated by board members, who think, steady as she goes!

I have enjoyed watching SBS's four-part series of "the dust bowl" which occurred in the USA's Great Plains in the 1930s.

It was a tragic decade where climate changed.

Lucky it has changed back! Tremendous clouds of dust would roll in and last for many hours, for day after day, and almost no rain would fall.

Many farmers just walked off their land with nothing, some even died from dust pneumonia.

Some managed to look around the house and find a dime to buy a loaf of bread that kept them alive to farm another day.

The question I would like to ask the rural community is; could that dime be our CBH?

And, if so, is it time to take that dime downtown and swap it for a loaf of bread for those who are hungry?

Sadly, if this year in WA is to be another dry one, or a modest one, or a late start and early finish, or with serious frost, then a similar significant portion of our farmers might have to leave their farms as did in the dust bowl.

This would further crash the equity of those remaining. It's a scary thought.

I am aware that the SA farmers made a mistake by selling their State's grain handler as a single unit.

This new monopoly, which induced a premium at the time, has caused hardships, as I have learnt on my study tours. We would not want to copy their approach?

However, today, I just wanted to raise the issue of fairness and the thought of giving your mate a fair go, for a fair share of the family's birth right, for which he is probably rightly entitled to.

I say this with the backdrop that competition is coming with Bunge at Bunbury and others at James Point and Albany.

The value of CBH will inevitably fall as tonnages erode from CBH.

It seems to me that the time is right to capture value from several supply chains about to start competing for business. An injection of non-government funds would buffer everyone from a potential tragedy and allow a smooth transition to retirement and allow the neighbour the strength to expand at a fair price - this would reduce pressure from foreign investment.

BILL CRABTREE - M.Sci., Morawa farmer, consultant, author and McKell Medallist.

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READER COMMENTS

Deregul8
6/04/2013 6:35:20 AM, on Farm Weekly

Congratulations Bill you are spot on! Farmers need to realise the corporatisation will not happen overnight. It takes time, time farmers don't have. We have left this decision to the deathknock. We have reached a tipping point where a large number of farms have been forced by the banks to either sit on the sidelines or retire with nothing but lament over what could have been. Because of the large numbers this has killed land, machinery and hasn't helped livestock prices. This situation will worsen before it improves. There is no option but to corporatise CBH!
beacon boy
6/04/2013 6:42:26 AM, on Farm Weekly

yep I`ve seen enough to jump from the co-op to corporatise bandwagon. out here things are bad and for younger farmers like me all I can see is a lifetime of foreclosures around me. how will I be able to borrow the money I need if land prices fall another 25%???? its bloody serious out here
District Average
6/04/2013 6:47:13 AM, on Farm Weekly

We need to stop land prices from crashing and that can only happen with a large injection of equity from somewhere. Since everyone is up to their eyeballs in debt, the only asset left that anyone wants is CBH. Its obvious land and machinery is not wanted by anyone. ' We should have listed this thing back when we were strong. Sadly we are out of options and luck.If nothing is done I can see lots of small towns closing up shop throughout the wheatbelt. Keepin the co-op at all costs, includes destroying your communities and small towns.
Kanzi
6/04/2013 7:01:53 AM, on Farm Weekly

Bill, if fairness is your focus, you'd have to include the 15'000 or more farmers who built CBH into what it is today, over the last 40 years or so, not just those remaining. Those wanting to sell now, are hoping to cash in on what others have helped them build. Personally I'd rather just see CBH do what it does now, with the proviso that if it is ever sold, the proceeds are split amongst those who built it, not just those who remain at the time of sale.
jj
6/04/2013 9:44:06 AM, on Farm Weekly

Where do you draw the line on who gets what ? There are a lot of farmers who spent years supporting CBH and have retired or been forced to cease farming in the last 10 years , that believe they should be entitled to something aswell
Interested Party
6/04/2013 3:20:03 PM, on Farm Weekly

Well written Bill but I'm not sure of this fairness line. No doubt some farmers are suffering and are in need of funding but is CBH the answer I think not. To me I've yet to see an argument that is nothing but short term relief and if the seasons continue this way some of the suffering farmers will be in the same boat a few years down the track. But then ALL farmers will be saddled with higher fees and facilities which will not have the same funding to be maintained! Is this fair on those who have found ways to survive? No way! Where's the fairness in this?
x
6/04/2013 5:40:36 PM, on Farm Weekly

To precipitate this issue , get the numbers and organise an EGM.!!! When growers were given the opportunity to reaffirm the Non Trading Co Op model they should have been also given the option to vote for a Trading Co-oP and Public listing model.We are probably going to lose another 1000 growers in the next 3-5 years and CBH may lose the tonnage it needs to break even annually as a result of Bunge and chinese competition. The CBH common pricing model is under direct threat. I believe the conservative directors have got their heads in the sand
Deregul8
6/04/2013 9:05:25 PM, on Farm Weekly

interested party, farmers will be 'saddled with higher fees' as the Chinese and Bunge cherry pick the profitability out of CBH. At the moment there is no incentive to remain loyal. A $2 share doesn't cut it. Corporatise is the only option for CBH to survive. You don't think these two entrants won't bring other players into other zones?
fred
6/04/2013 9:58:31 PM, on Farm Weekly

Corporatising CBH won't bring better returns for grain. Yeah, I suppose we could borrow against the equity in it for a year (or 2 or 3). Then what? Sell your shares to some greedy ty-coon whose only interest is return on his investment. So he'll demand his return and nothing will go into improving infrastructure
Consolidated
7/04/2013 7:15:54 AM, on Farm Weekly

'Fairness' and 'Entitlement' are words Joseph Stalin's would have used on a daily basis. Farming can never survive with a socialist agenda. You either still have your shares or you don't. Its a mute argument. Its rather like saying I sold by BHP shares for $10, now they are $35 its only 'fair' I get a share of the $25 someone wiser than me got, by buying my shares. Get out of town!!
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