Time for CBH to have a look at a compensatory system

Time for CBH to have a look at a compensatory system


Time for CBH to have a look at a compensatory system?


IN a perfect world there would be a CBH facility at every farmgate, with all segregations available, as all members pay the same handling charges.

Distance is the number one criteria which influences the level of service CBH is able to provide to its members.

If you are close to a facility the service level is high and it costs you very little in the way of onfarm mobile storage, transport costs and travel time to deliver your grains to the facility.

On the other end of the spectrum is the grower whose farmgate is 50 plus kilometres from the CBH facility.

He pays the same handling charges as the grower adjacent to the facility however to keep his same harvesting capacity going he has to invest in considerably more mobile onfarm storage, provide more trucking capacity and incurs much more time in travelling to and from the CBH facility which furthers the need for considerably more mobile and onfarm storage and trucking capacity.

Growers in this situation have considerably more capital and depreciation of assets tied up in delivering their grain than a grower close to a CBH facility and yet still pays the same price for a lesser service than the grower adjacent to a CBH facility which all growers collectively built.

Farmgate to CBH facility is the number one discrimination between growers and causes CBH the most grief from its membership.

Not having adequate service levels and in many cases further reduced by closing their facility is the number one problem.

Charging for the level of service provided to the grower may not be equal, however equity would solve many of the member complaints in regards to service levels.

If CBH only compensated partially for the transport component the majority if not all members would feel they were at least being treated by the co-operative fairly and equitably.

Any reduced fee for service level will not fully compensate the remote grower, however it goes a long way towards treating all growers equitably.

This solution allows for fewer CBH facilities with many more segregations and scale that brings with it efficiencies and solutions not justifiable with an unaffordable multitude of storages.

CBH requires fewer facilities to cover the grainbelt so overall costs in capital and maintenance are reduced.

Every grower should be a beneficiary of such a network.

Should CBH elect not to introduce some form of compensatory system as above, discrimination will be magnified considerably further with all the savings of the new network being at the expense of some growers having to transport grain further and the big winners will be those already having very low transport costs adjacent to the new network facilities where costs will reduce even further as they no longer have to provide a similar service level to growers further out who have had their facility closed.

Going forward with Paddock Planner the above compensatory system could be implemented with a system similar to Uber that tracks actual kilometres and all members could in fact be equal whether adjacent to the CBH facility or 75km away.

The other benefit of this system would be the desire by board and management to keep compensatory costs down by placing facilities to minimise discounts to growers thus driving a higher level of service versus costs.


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