No stone unturned in major CBH review

No stone unturned in major CBH review


Agribusiness
p CBH board director Trevor Badger (left) and chairman Wally Newman. CBH is conducting a all-encompassing structural and governance review with details to be released in September.

p CBH board director Trevor Badger (left) and chairman Wally Newman. CBH is conducting a all-encompassing structural and governance review with details to be released in September.

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ALL cards are on the table as part of CBH's structural and governance review, allowing growers to vote on a range of models including full or part corporatisation.

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ALL cards are on the table as part of CBH's structural and governance review, allowing growers to vote on a range of models including full or part corporatisation.

In one of the biggest and most comprehensive reviews in the past 20 years, the group's board wants "no bias, no agenda pushing and no stones unturned" to ensure growers have the final say in changes at the co-operative.

CBH chairman Wally Newman said there had been a lack of grower engagement in previous structural reviews, which is why the board was keen to hear from all growers in during the process.

In March, CBH surveyed 900 growers across 22 grower meetings, with an additional 25 per cent of the members surveyed in a formal quantitative survey.

"From a board level CBH has looked at its structure constantly, however our last major review in 2009 didn't involve growers to any great level," Mr Newman said.

"Ultimately, co-operative principles are about democratic control and growers have that control."

The review committee, headed up by CBH board director Trevor Badger, has also engaged the consultancy services of Deutsche Bank, PWC, King and Wood Mallesons and Churchill Associates.

It is seeking advice from international co-operative specialists to test the advice from consultants.

Mr Badger said there were three main structures up for consideration by growers.

"There's the non-distributing co-operative structure, which is where we are today,'' he said.

"There's a distributing co-operative that can pay dividends and issue shares to members and then there's a corporate entity which could take the form of a listed business, private business with equity partners or a listed company with co-operative principles."

Mr Badger said once a structure had been decided, growers could begin to "bolt" on different parts of the business that they wanted.

"There are still things we can do with the current system, such as improvements to the rebate system introduced in 2009.

"However, if growers want profits or equity returns, this is not achievable as a non-distributing co-operative under law and therefore we will have to look at a distributing co-operative structure with returns based on patronage and proportion of business."

Turning to its governance review, Mr Badger said this includes the election process, board diversity and skill set, as well as duration on the board and zones.

He said this was where growers could also vote to change what determines a member, however to make changes to the co-operative's constitution, 75pc member support was needed.

While "one vote, one member" would remain, growers could decide to change the tonnage that a member needs to contribute to the CBH system, which stands at 600 tonnes over three years.

The review is costing about $2 million, which Mr Badger defended, saying it was a small price to pay for a co-operative turning over more than $3 billion annually.

Mr Badger said the recent proposal by Australian Grains Champion had "piqued interest" in CBH's structure and governance.

"Growers are generally happy with our structure, with 71pc expressing their satisfaction with CBH in grower surveys conducted in March,'' he said.

"However at the same time, 89pc have expressed an interest in learning more about the structure and understanding how they extract value from the co-operative.

"Farmers are much more educated, they have a good understanding of how to manage their capital, there's increased understanding of how the global markets work and this extends to wanting to know more about how they can extract value from their co-operative."

He said the non-distributing co-operative structure remained very attractive for a lot of growers due to higher margins per tonne of grain and the tax breaks associated with this structure.

"At the end of the day, a successful CBH means a successful WA grains industry. We want to make sure our growers have sustainable, long-term cash flow," Mr Badger said.

The board is evaluating the survey information, with a booklet to be sent to growers in September that outlines the various options in terms of non, part or total corporatisation.

Following the release of the booklet, growers will be consulted again at meetings to determine what changes, if any, are to be made to the co-operative, with changes to be rolled out from early 2017.

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