CBH Chairman Simon Stead defends rebate decision

The full details of CBH's financial position are set to be presented in its annual report, usually released in December, but according to an email sent to growers on Monday, a portion of that surplus will instead be used to invest in the network.

M&T's projection to deliver a record surplus has been driven by unprecedented market conditions, including the record 2022/23 harvest which saw growers deliver 21.3 million tonnes to CBH.

There have also been impacts to the global grain market stemming primarily from the Ukraine conflict and other international protectionist policies.

CBH chairman Simon Stead said given this, CBH would not offer rebates to growers this year and a portion of the surplus would be reinvested in the network in line with CBH's network investment plan.

"The remainder of the surplus will be retained within Marketing and Trading to continue to fund working capital requirements," Mr Stead said.

"Particularly as we seek to achieve the strategic objective of being able to market about 50 per cent of the growing crop size and maintain sufficient equity to withstand ongoing market volatility."

It's a decision which has been met with disappointment from growers who had hoped a rebate would provide some relief from the grain trading margins which have been excessive due to shipping slot shortages and the inability to get grain from country to port.

Southern Brook farmer and former CBH deputy chairman Vern Dempster said the decision not to pay a rebate to growers who sold their grain to CBH was a significant departure from the practice of previous boards.

MORE STORIES:

"Those boards treated CBH Grains (M&T) as a co-operative in its own right and used its profits to either boost the capital base of CBH Grains or rebate the surpluses back to its grower patrons," Mr Dempster said in a letter that appears on page 12 in Section 2 of today's edition.

"The capital base of CBH Grains has been made entirely from its retained earnings and not through any contributions from the CBH parent.

"Using the windfall profits from 2021/22 to pay a dividend to the CBH parent company rather than rebate the surpluses to growers ends this practice and treats CBH Grains as a mere fundraiser for the CBH parent rather than the honest broker of the grain market that CBH promotes."

CBH predicts last season's record is likely to be the norm by 2033 and, with the highs and lows of good and bad seasons, this could increase to a peak of between 28-30mt.

With that in mind, it has set a goal of being able to achieve a peak export capacity of 3mt by 2033 and being able to outturn 70pc of the crop in the front half of the year where it will generate higher value for growers.

"In line with this, it is more important than ever for CBH to continue our elevated investment in the network so we can move tonnes to port efficiently and export in time to also meet our customer's requirements," Mr Stead said.

"In considering the strategy and our purpose of sustainably creating and returning value to growers, it is clear we need to reinvest surplus funds within the business to continue to increase the capacity of the supply chain for Western Australian growers.

"On this basis, CBH will not offer rebates to growers this year."

It's the third year in a row CBH has opted not to reward its shareholders with a bonus, having stopped the payments in 2020 after nine years of providing them consistently.

It's a decision not limited to the M&T division, with any surplus cash flow from Operations to also be reinvested in the network to continue improving the ability to receive the harvest efficiently, sustain assets and build infrastructure to increase tonnes to customer capability of the network.

In terms of investments, Interflour Group and Blue Lake Milling have continued to perform well this year.

In line with the decision made last year, both companies will retain earnings to support their own capital requirements and will not return a dividend.