DISTRICT two candidates for this year's CBH Group member director elections are profiled by Farm Weekly this week to help growers in that district establish who they prefer to represent their views on the board.
District two covers the Central Wheatbelt, from Moora, Ballidu, Koorda and Bencubbin in the north to Northam, Kellerberrin, Merredin and Marvel Loch in the south and from the coast to east of Southern Cross.
Incumbent director first elected 12 years ago, Vern Dempster, is being challenged in district two by first-time board candidate John O'Neil.
Farm Weekly asked them to answer the same six questions District four candidates answered last week.
The questions were:
1. What motivated you to nominate for the CBH Group board as a member director at this election?
2. What key qualities or experiences do you believe you can bring to the CBH Group board?
3. If elected/re-elected what, if any, changes to the corporate structure of CBH or to the way its various business units operate, will you strive to achieve in your term as a member director?
4. CBH Group's core operations business has provided consistent profits, but the marketing and trading division and some external investments have not been as consistently profitable. In your view, should CBH focus more on its traditional, profitable operations area and perhaps less on marketing and trading, external investments or any other business areas you might consider 'non-core'?
5. Western Australians are regularly told our production costs are too high, putting our commodities at a price disadvantage to competitors on international markets. As a CBH director, how would you rationalise the grower-driven requirement to maintain an extensive network of grain delivery and storage locations offering multiple segregations, with the need to trim paddock-to-port costs?
6. Is there anything else you think CBH Group members need to know?
The district two candidate's responses are below.
Responses of district one candidates to the same questions will be published in Farm Weekly next week.
CBH members in district two should have received a ballot pack.
They need to vote before the close of the poll at 10am on Monday, February 17.
The results will be announced following counting of votes on that day.
For further information on the CBH Group member director elections contact WA Electoral Commission returning officer Phil Richards, phil.richards@waec.wa.gov.au or 9214 0443.
VERN DEMPSTER - NORTHAM
Answer 1: I have been on the board during a time when CBH has delivered many innovations and benefits to growers and I wish for this to continue.
For the board to be effective, a level of experience and continuity is required and I believe I provide this.
This is important to CBH because the board will have had three experienced directors resign in two years when this is a time of profound change within the company.
I am proud to have been a part of introducing grower rebates, introducing quality optimisation, keeping rail freight rates at or below what they were 10 years ago (by investing in rail rolling stock), reinvesting large amounts of funds into infrastructure ($285m in 2019), all at the same time as reducing storage and handling charges to where they are now at approximately 53pc of that paid by South Australian farmers.
Answer 2: I believe I have the experience and expertise to continue to constructively contribute to the effectiveness of the CBH board.
The greatest ideals of directors can be in vain if the board lacks enough expertise and experience to govern effectively.
I have had extensive board experience, serving on the boards of United Farmers Co-operative, Interflour and CBH, including 5.7 years as deputy chairman.
I am a graduate member of Australian Institute of Company Directors and regularly attend director updates and briefings, including several within the past 12 months.
In internal board peer reviews I have consistently performed well, particularly with regard to financial competency.
I have never shied from putting growers' interests first.
Answer 3: The current co-operative structure offers many advantages.
It ensures there are no external shareholders, no conflicts of interests and has tax advantages competitors only dream of.
It ensures CBH can remain totally grower focussed.
However, for CBH's investments I would be happy to investigate ways to enable some form of direct grower ownership.
Answer 4: The core business of storage and handling must always be the key focus of CBH and other areas of the business must never distract us from its dominance.
However there are synergies between Marketing and Trading (M&T) and Operations that create real efficiencies and the competition M&T provides ensures a fairer grain price for WA farmers.
The last year has demonstrated the high risks involved in trading grain and the need for conservative risk limits.
It should be remembered that the capital for M&T has come from profits accumulated from previous years' grain trading and there has never been any contribution from the core Operations business.
The losses incurred in M&T have therefore been financed by previous years' profits.
It has always been my view that we have a cautious approach to investments outside of the core.
That does not mean never.
In the same way as it's prudent for farmers to invest and risk relatively small investment amounts off-farm, so too it is with CBH.
Where we can achieve realistic profits and at the same time secure market advantages or input cost reductions, then I'm OK with it, but we don't bet the farm.
One has to be mature enough to understand that most businesses are cyclical and won't make a profit every year.
Answer 5: The premise that we have to keep our supply chain costs as low as possible to remain competitive is absolutely correct.
However, there are concerns that CBH's attempt to do this by rationalising sites and segregations has shifted costs back onto growers.
There needs to be more transparency with growers to substantiate to them that the added grower costs are more than offset by the reduction in CBH costs.
Calculating this has been controversial at board level.
I have supported a CBH minimum service obligation that sets maximum distances from paddock to site for the major segregations.
The adoption of Paddock Planner should enable CBH to better match the location of segregations to the paddocks where grain is grown and thus reduce costs to growers and CBH.
Having smaller existing satellite sites properly maintained and updated so that in big years they can be better utilised rather than always building new surge capacity at the centralised sites deserves better analysis.
However the cost of emergency movements of grain by CBH at harvest time to keep key sites alive has to be avoided as it just burns money.
Automated weighbridges and improved automated sampling techniques will keep costs down with lower staffing requirements, while mobile weighbridges and drive-over grids will allow emergency utilisation of smaller sites when production "hot spots" occur.
JOHN O'NEIL - WIALKI
Answer 1: I have felt for some time that the CBH board has lost its focus on grower outcomes.
The co-op was set up to handle and store grain.
This is where growers see most tangible benefit.
The ability to keep harvesters rolling at harvest time is what affects growers.
The board's focus on investments away from the paddock-to-port pathway has not led to a strengthening of CBH, but has in fact exposed the co-op to a higher level of risk.
Answer 2: I have a Bachelor of Business from Muresk.
I farm in the north eastern Wheatbelt where you learn to adapt, be flexible but also to change your plan if it is not working.
Over many years of working on boards and committees I have developed a skill set that will enable me to exercise good governance, ask the "what if" questions and work co-operatively with fellow board members.
Answer 3: I have no desire to change the co-operative model for grain handling and storage.
I believe there is always a greater need for transparency between how the different sections interact.
If a section is underperforming and is being propped up by another section this needs to be explained to the growers - "sunlight is a good antiseptic" is a saying applicable for this situation.
I believe that there needs to be a refocussing on growers.
Answer 4: At its core, CBH is a grain handling and storage co-op, it has a fantastic record bringing a quality service at the lowest price possible, this is the engine room of the organisation.
Outside the paddock-to-port pathway, growers have been told that outside investments were to strengthen our co-operative.
I would argue that there has been a litany of losses that have in fact been propped up by the growers.
This is money that has been lost for onsite infrastructure, 100 weighbridges would cost $43m - imagine what that would do to turnaround time at receival points.
When you look to outside investments you look for synergies that include upstream value and/or mitigating risk through being involved in another type of business.
I don't believe all our current outside investments would meet these standards.
I would like to propose that CBH look to de-merge some of the outside investments into a separate entity and give growers equity in this different structure.
Growers would then have choice about their personal level of involvement.
This could only happen after consultation and the approval of the growers.
The investments where CBH has delivered most tangible benefit to growers have been right here in WA, examples being the CDF app and the trains and rolling stock, providing huge benefits in cost reduction and information flow.
Answer 5: In the forefront of all growers' minds is the question of what level of service my business will receive from CBH.
The long-term strategy of site rationalisation has had an effect on all growers.
When a decision is made to upgrade a site at the expense of others it is essential that the centralised facility has a faster turnaround time for trucks.
More truck movements will allow the harvesters to roll in the paddock.
I believe the CBH storage and handling system is a world leader and it must be allowed to continue that way free from outside distractions.
Answer 6: A vote for me is a vote for new energy, a fresh view of the co-operative.
I come unencumbered from past decisions.
My focus will be moving the co-operative forward for the benefit of present and future grain growers of WA.
