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About Us

As a Cooperative, and being guided by the 7 Principles, we are providing WA Grain Growers another layer of oversight to ensure proper governance and accountability, to minimize waste and maximize the efficiency and effectiveness of CBH capital expenditure.

Our Aims & Objectives Include:

• To protect and promote Cooperative Bulk Handling (CBH), upholding universal       cooperative principles, including democratic control by members, while maximizing   farm gate returns
• To ensure that any departure from Grain Pool and CBH traditions and practices only  occurs when approved by a majority of CBH Shareholders/Members
• CBH grain trading surplus, less reserves, to be rebated to grain growers based on     patronage, unless decided otherwise by a majority of CBH Shareholder Members
• Accelerate the CBH 2033 plan to increase grain shipping capacity to 3 million tonnes  per month to capture premium market prices
• Encourage Federal, State and CBH investment in rail
• Ensure that CBH executive incentives are based on and aligned with maximizing   farm gate returns
• Work with the Australian Competition and Consumer Commission to minimize   structural inefficiencies in the port, rail and road transportation systems
• Provide another layer of oversight to ensure proper governance and accountability,   minimize waste and maximize the efficiency and effectiveness of CBH capital expenditure

Balladonia Rocks West Australia

Thoughts On Crop Of The Century

The record harvest is a massive challenge and must expose any weakness in the system; but it is also the culmination of the outstanding success of CBH and the Grain Pool over the last century. Without these organisations the grains industry of Western Australia would never have grown to the extent that now WA alone can grow more than 24 million tonnes in a season.

Good times can be a greater test of character than hard times. Remember, the greatest depression the world has ever known followed the “Roaring Twenties”, less than 100 years ago.

When times are good it is time to take more care of those things upon which the good times depend. For West Australian grain growers that means taking care of CBH and what is left of the orderly marketing arrangements established a century ago.

Mark Fowler’s recent article rightly identifies inadequate shipping slots as a key issue to be resolved.

If a grain buyer wants 30,000 tonnes of grain he has to negotiate with the owner of a shipping slot, or could wait for 12 months or more for a slot to become available.

This is more than strange given that CBH own all the grain out loading facilities at 4 major ports in Western Australia. It is inconceivable that Rio Tinto would build a port and loading facilities and then find some other firm has filled all the shipping slots.

We are told this state of affairs will come to an end at the end of 2023. Too late! The ACCC exists to defend consumers from exploitation. They will favorably consider an application for relief where the current arrangements create a profit for those who book the slots at the expense of the growers who paid for the port facilities.

This problem needs to be solved with an immediate application to the ACCC for relief for growers and CBH.

A problem of even greater concern is the inability to deliver enough grain to port. Kwinana was designed to ship more than 40 million tonnes per annum, but apparently its struggles to receive 14 million tonnes into store per annum.

In the last 50 years the iron ore industry has geared itself to ship a1.88 million tonnes per day. The grains industry has been here for twice as long and we struggle to deliver more than 1.2 million tonnes per month (0.04 million tonnes per day) into the Kwinana Terminal.

The CBH 2033 Plan to increase deliveries into port to 3 million tonnes per month is laudable but far too late.

The world needs our grain now and are willing to pay for it now. WA has the grain but apparently can’t deliver it until perhaps the need is passed and the price is less. This fact is the principle reason that WA grain growers are receiving as much as 20% less than the current world price.

Everyone knows that the system needs urgent improvement. The decision to invest $168 million from last year’s surplus is welcomed by growers most of whom have sold the majority of their grain to marketers other than CBH; who want the upgrades and are prepared to make a substantial contribution. CBH has unwittingly made those growers free riders.

Be warned, this deceptively attractive value proposition: invest $168 million from the trading surplus to improve the system capacity, is a trap for the unwary. If you want to know why, Google “free rider effect”.

Yes, there needs to be an immediate large investment in upgrading the system. Yes, the growers are willing to make a substantial contribution. The error is to take a trading surplus from the subset of growers who sold their grain to M&T to invest in the system which will benefit all growers.

There is a much better way for growers to contribute to the urgently needed systems upgrade. By paying an additional $1.08c on every tonne delivered into the system, $168 million can be borrowed at 5% and repaid over 10 years with a harvest averaging 20 million tonnes per annum. If the harvest fell to 15 million tonnes the cost would rise to about $1.25 per tonne.

This is an entirely equitable way of spreading the cost across every tonne of grain in the system. The current CBH approach is to clobber the subset of growers who contributed grain to M&T by $16.80 per tonne. This is not the way a co-operative should operate. The history of co-operatives is riddled with examples of failures caused by co-operatives slugging a few to benefit the many. If these growers were told in advance that this would happen, would they have consigned grain to M&T?

Some people do think that CBH is the one that creates the competition, however, CBH is below world parity prices, especially in the Kwinana Zone.

The alignment of some staff bonuses to trading profit rather than simply maximizing the grain sale price, is a further indication that the current approach is to mimic private traders rather than behave as a co-operative.

An even more profound problem with the current approach is that surpluses are being accrued in a proprietary subsidiary. The proprietary subsidiary will have its capital base increased by about $300 million. Its turnover will grow, and with large harvests, and it will rapidly increase in capital value to rival Grain Corp.

A similar chain of events occurred with South Australian grain growers. Like a cuckoo in the nest the commercial subsidiary grew like Topsy until the market made an offer too good to refuse, too good to be true and the growers voted to relinquish their control entirely. Speak to a South Australian grain grower now about the storage, handling and delivery today and it will be realized that grower control matters above all else.

A fundamental principle of co-operatives is democratic control by members. These days democracy is hard to find in CBH. The Media are excluded from the AGM, questions are limited and motions from the floor disallowed. Board members are pressured to sign a declaration offering to resign if called upon by a majority of the Board. This is a recipe for “group think” and takes from the membership the sole right to elect or dismiss their Board representatives.

It is almost impossible for members to express their common view, far less exert their common will. This lack of control applies with even greater force to the proprietary subsidiaries of CBH. The Board members of the subsidiaries will maximize their profits at the expense of growers but excuse it on the grounds that the growers own this profit through the co-op. Runaway management is another prime cause of co-operative failures in the past.

There are other important issues to raise for grain growers to consider in this time of plenty, including the issue of pricing and pools. I hope to address that subject in the next installment.

In the meantime, at least we have the start of a debate. This is not only healthy but necessary for the future prosperity of the industry.

James Ferguson
Executive Officer
0459111901

WHY JOIN THE GRAIN BULK HANDLERS ASSOCIATION?

1. To maximize grower returns.
2. Do growers want their Co-operative to rebate trading surpluses to growers based on patronage or to spawn another Grain Corp or Cargills?
3. Our farming future depends on an efficient, effective and low cost CBH Group.
4. The Grain Bulk Handlers Association is the voice for growers who want the logistics chain to be operated in their interests and more efficiently.
5. We need to act together to assert our right to control the future direction of CBH.