CBH Elections: Stability vs. fresh focus for District 2

Countryman
Two farmers are vying for the one spot to represent District 2 on the CBH board.
Camera IconTwo farmers are vying for the one spot to represent District 2 on the CBH board. Credit: Nic Ellis

Two farmers are vying for the one spot to represent District 2 on the CBH board.

The successful candidate will be one of two directors representing District 2, after Mukinbudin farmer Jeff Seaby replaced retiring director Derek Clauson last year.

Countryman speaks to the incumbent Vern Dempster, of Northam, and his challenger, John O’Neil, of Mukinbudin.

VERN DEMPSTER, NORTHAM

Vern Dempster.
Camera IconVern Dempster. Credit: Supplied

Tell us a bit about yourself.

I’m a 64-year-old career farmer who in conjunction with my two sons and their spouses run a successful 5000ha mixed farming operation in the Southern Brook-Meckering-Goomalling area.

I have had extensive board experience serving on the boards of United Farmers’ Cooperative, Interflour, and CBH, including more than five years as deputy chairman.

I also previously held a number of executive positions at WAFarmers.

I am a graduate member of Australian Institute of Company Directors and regularly attend director updates and briefings, including several during the last 12 months.

In internal board peer reviews I have consistently performed well, particularly with regard to financial competency.

I have sufficient time and motivation to continue to diligently perform the responsibilities of a CBH director.

Why have you nominated for a director position?

I feel that at this stage too many changes at board level, particularly of the more experienced directors, would not be helpful to the boards effectiveness.

At the moment this is particularly important.

During the past two years there has been much change in CBH at management level, which occurred with the change in chief executive.

I believe that my skills as an experienced board director, with strength in finance, will be able to make an important contribution to the board’s ability to judge the success of those changes.

What do you think you can bring to the CBH board?

I bring continuity, experience and financial competence to the board.

Without these traits in board members it is very difficult for a board to hold management to account or steer the direction of the co-operative.

What do you think CBH does well? What do you think it can do better?

CBH has successfully kept fees low.

Storage and handling fees, before rebates, are about $21 per tonne cheaper than Glencore in South Australia and $16 per tonne cheaper than GrainCorp.

In addition, rail freight rates are at or below what they were 10 years ago.

Regarding services, I support the board setting maximum distance and turn around times from paddock to sites for major segregations.

Emergency grain movements at harvest time are expensive and inefficient.

The top 30 sites were about 40 per cent oversubscribed in 2018-19, which means either the focus of future capital expenditure has to be aimed at their expansion or smaller under-subscribed sites have to be better utilised.

The later option needs more attention.

What are your thoughts on corporatising CBH?

My track record is impeccably pro co-operative and growers need to be on their guard against any future attempts to give non-growers ownership and then control of our co-operative. Inevitably this will be dressed up as “unlocking capital”. Having income tax exemption and with no dividends paid to external shareholders makes our co-operative model the most cost advantageous possible.

What is your view on CBH investing outside WA?

If there are synergies in the investment that mean our fixed costs are spread over extra tonnes then that should mean a win-win. However, investing outside of our area of expertise is dangerous and CBH hasn’t proven to be good at this.

If CBH funds are used the returns have to be very commercially attractive. On the whole, I’m cautious but not prepared to say never ever.

What challenges and opportunities do you see for CBH?

We are faced with competitors from the Black Sea and South America with grain production costs below ours. As an outcome our supply chain costs need to be as low as possible.

Next, if there are input costs where CBH can make material savings, then we should do so.

We should also be co-ordinating with seed breeders to enhance attributes to our grain that end users’ desire. European breed barley varieties currently have an advantage over Australian breed varieties with shorter dormancy requirements and better enzyme characteristics for malt production.

Any way we can de-commoditise our grain should be our objective. Our wheat produces very white flour without the need for bleaching chemicals.

There needs to be a marketing campaign for white flour produced with Australian wheat.

Our oats, which are naturally ripened, compete with ripened oats from Canada and Europe. Do oatmeal consumers know this at brand level?

JOHN O’NEIL MUKINBUDIN

John O'Neil.
Camera IconJohn O'Neil. Credit: Supplied

Tell us a bit about yourself.

I am a fourth-generation farmer at Wialki and Karloning.

Alongside my wife, Trish, we run a mixed-farming operation on 6400ha, which is about 60 per cent grain and 40 per cent sheep. The ratio will vary with each year depending on the season.

I have a Bachelor of Business from Muresk.

I am a qualified Community Landcare Technician.

In the past 30 years I have served on many boards and committees, including International Rural Exchange, Mukinbudin Bendigo Bank, Shire of Mukinbudin, Ninghan Farm Focus Group, Central Wheatbelt Football League and Mukinbudin Bowling Club. All positions have taught me how to seek knowledge, implement strategies, review and adapt if necessary.

Why have you nominated for a director position?

I have a great passion and desire to see a strong CBH group focused on returning real value to the growers.

Growers need CBH to give us the optimum grain handling system from “paddock to port”.

As growers, this is where we have most interaction with CBH.

All boards need renewal to energise itself and look to the future.

What do you think CBH does well? What do you think it can do better?

CBH is great at its core business of handling and storing grain.

The CDF app will drive future efficiencies, real-time information between header drivers and truck drivers.

Investment in trains and rolling stock has helped to keep freight rates down.

Growers want access to good reliable information so they can make quality decisions.

The information flow both ways needs constant refinement.

What do you think you can bring to the CBH board?

I bring my passion for agriculture, my qualifications, experiences and enthusiasm.

I believe that we have a great industry to be involved in and part of that mix is a strong and efficient CBH.

I believe that my life experiences have given me the ability to work to obtain the best outcomes for all growers.

I have a proven ability to work with people at all levels, exercise good governance to achieve workable outcomes.

What are your thoughts on corporatising CBH?

Nearly 90 years ago growers set up a co-operative to store and handle grain.

I have no desire to change the structure of the paddock to port pipeline.

The South Australian example of how quickly it can go wrong for growers makes a compelling case study.

There may be an opportunity to de-merge some of the non-core subsidiaries and investment to a separate entity where growers would have direct equity and choice of participation.

This could only happen after extensive consultation with the growers.

Growers would have the final decision.

What is your view on CBH investing outside WA?

All investments wherever they are must be for the betterment of WA growers.

The mills through Asia and the handling facilities over east are currently being propped up by growers.

The Interflour Group has just been given what could be seen as an unsecured loan of $43 million.

That equates to approximately $11,000 per grower with no certainty that this will be recovered, and with no guarantee to purchase grain from WA.

This is money that is not available for reinvestment in infrastructure within WA.

These outside investments have all been in the agricultural industry and sold to growers that we would share in downstream profits.

There needs to be a review of this policy.

There are other ways to invest growers’ funds to strengthen the CBH group.

I am sure that there may be opportunities to invest outside of WA in the future, but the business model would have to be very strong.

The investments that have been of greatest value to growers have been mostly been supply chain investments in WA.

What challenges and opportunities do you see for CBH?

What affects most growers is the ability to move grain from paddock to port. Make sure we get that right.

The challenge to get grain paddock to port with adequate storage capacity at both ends and the combination of road and rail to achieve that result.

The use of rail is highly desired as 2,500T on rail is 50 less truck movements that are on our roads.

As always, the challenge is to get the balance between cost and service.

An opportunity may be a liquid fertiliser facility to supplement the fertiliser business.

I would like to put forward a feasibility study into what benefits there would be for growers.

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