Dempster makes his case

Vern Dempster, of Northam, hopes to retain his seat on the CBH board representing District 2.

Why are you standing for re-election?

To finish the job I was elected to do. I joined the board when it appeared to be hell bent on reducing grower benefits to improve CBH profits, in order to list on the ASX. We turned this around but only recently have we had the singularity of purpose at the board level to drive CBH to higher levels of efficiency and to greater grower benefits. I want to see the large savings we have identified in construction, administration and procurement followed into reality and delivered back to growers by greater rebates. With a $10 a tonne rebate, it would make WA almost $30/t cheaper than eastern Australia in shipping and handling as well as freight.

What experience do you bring to the table?

I sat on the United Farmers Co-operative board for four years. I have also had considerable experience at committee level in WAFarmers, including a term as grains vice-president. I have spent three-and-a-half years on the CBH board as deputy chairman, as well as seven years on its audit and risk committee and two years on the remuneration and nomination committee. I have had two years on the Interflour board, based in Singapore. I have also been a graduate member of the Australian Institute of Company Directors since 2000.

What changes do you hope to make on the board and at CBH?

I want to see a permanent network and engineering board committee established, to more effectively oversee the efficiency of the network and engineering spend and to monitor logistical operations and strategy. I will investigate ways to facilitate direct grower ownership in CBH’s non-core investments, such as in Blue Lake Milling or the Interflour Group. To improve the information flow between members, the board and the executive, I favour the holding of more regional meetings, perhaps combined with member dinners. I support changes to CBH’s rules so that a minimum grower participation level of 50 per cent is required before changes can be made that may demutualise the co-operative.

What are your thoughts on Australian Grains Champion’s attempt to corporatise CBH?

I am against any attempt to corporatise CBH. The board employed top-class professionals to analyse the proposal. Their advice was that it was not in members’ best interests. AGC wanted CBH to ignore this, and to put the proposal directly to its members. However, this would have given the proposal credibility and exposed CBH directors to fiduciary negligence. If CBH members had the appetite to sell the co-operative, this was not the best way to do it, because of the leakage of value away from them to the foundation shareholders of AGC, GrainCorp and Morrisons. A subsequent survey of members indicated there was no appetite to sell the co-operative, with only 12 per cent of members favouring corporatisation.

What is your view on CBH investing outside of WA?

Our core business is in WA and this must remain CBH’s focus. But there are strategic reasons to look further afield in a modest manner to obtain economies of scale. This may be able to be obtained in other States by a partnership arrangement with their local growers contributing capital. I am in favour of limited investment into downstream processing where it improves market access and intelligence for our grain, and where returns are commercial. All investments need ongoing review as to whether their strategic objectives are being met in the long term.

What are the biggest issues or challenges for CBH in the next five years?

Increased grain production will continue, as well as harvest occurring within a shorter window. The ongoing challenge is to handle increased grain receivals quickly and efficiently and outload it at port when the market requires it. That will require ongoing reviews of CBH’s network strategy. Members may be tempted to take an undervalued offer for CBH by a corporate raider. We have to continually illustrate to our members the value we provide to them. Multinationals are financing a sustained price-cutting war in WA’s grain market and reducing our economies of scale. Another challenge is the relatively high production costs of growing grain in Australia and our need to identify where input cost savings can be made through co-operation.

Should smaller sites be closed to increase efficiency across the network?

We cannot stand in the way of increased efficiency. We do have to have the lowest cost pathway to our markets. My role is to ensure the savings of operating bigger sites are clearly in excess of the added costs imposed on growers before signing off on bin closures.

Final comments

I am seeing the residues of the Australian Grain Champion takeover attempt. CBH has been successful. Member growers should do a comparison with growers in the east about their supply chain costs and prices. I do not think AGC has gone away, but it is hoping for a more sympathetic board to be elected.