CBH says fee cuts can make its suppliers better businesses

Sean Smith and Cally DupeThe West Australian
Jimmy Wilson chats with growers at Dowerin.
Camera IconJimmy Wilson chats with growers at Dowerin. Credit: Todd Cardy

CBH chief and former BHP iron ore boss Jimmy Wilson says suppliers can become stronger businesses by cutting their charges to the grain handler.

This year the co-operative asked 100 suppliers to cut their rates by at least 20 per cent as part of a cost drive aimed at generating $100 million in savings.

Suppliers were hit up in a similar manner during Mr Wilson’s tenure at BHP, which was marked by a dramatic increase in its Pilbara iron ore production and lower operating costs.

Mr Wilson, now a year at CBH, said yesterday the group did not want to see its suppliers “broken”.

“We want our suppliers to be able to provide us with services and goods more effectively and efficiently,” he said.

“But we we don’t want them to go broke.

“It’s important that they come ... with us and become more efficient themselves.”

Mr Wilson said CBH was about one-third of the way through the savings program, but he declined to detail the cuts so far.

Asked whether he should be regarded as a “change agent” at the group, Mr Wilson admitted he did “like to lead change”.

“But I would like to believe it’s sustainable change that will benefit the organisation over the long term and not just the short term,” he said.

He also revealed that a major turnaround is under way at CBH’s part-owned Asian miller, Interflour, to rectify its financial performance.

Mr Wilson said CBH opted not to give WA growers an investment rebate this year because of Interflour’s underperformance, which has been blamed on stiffening competition and low margins in Indonesia and Malaysia.

“They play in a very cyclical market, their performance hasn’t been that good,” Mr Wilson said. “We anticipate its performance will be better next year. There is a very significant turnaround plan in place at the moment.”

CBH bought a 50 per cent stake in Interflour with Indonesian billionaire Antoni Salim in 2005 with the aim of cashing in on Indonesia’s burgeoning wheat consumption, which has more than doubled in the past 15 years.

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