Eastern support for WA’s co-op model

Cally DupeCountryman
South Australian Brinkworth grain grower Shane Weckert, who sells grain to CBH.
Camera IconSouth Australian Brinkworth grain grower Shane Weckert, who sells grain to CBH. Credit: Cally Dupe

A pair of South Australian growers say WA farmers should hold on to CBH’s co-operative model with both hands, nearly three years after CBH was presented with a bid to corporatise and list on the Australian Stock Exchange.

Brinkworth farmer Shane Weckert and Port Kenny farmer Nathan Little were the first South Australian growers to attend one of CBH’s annual international Grower Study Tours, returning to their farms last week after spending 10 days overseas with more than 40 WA grain growers and a handful of CBH staff.

The pair have sold grain to CBH regularly during the past decade, delivering to Canadian-owned bulk handler Viterra Australia for a cash price on the day.

Lawson Grains chief executive Russell Cavill, who is based in Albury, also attended the tour.

Mr Little said if CBH was “price competitive” he always delivered to the WA farmer-owned grain co-operative because he strongly believed in the cooperative model.

He crops 2000ha across his 3200ha property, and runs 1200 breeding Merino ewes.

“I don’t sell all of my grain to CBH but when I decide to sell, I always check with them and if everyone is in the same price I will sell to them any day of the week,” he said.

“They are price competitive, and I just like support the co-operative model, even though it is a WA company.

“I wish South Australia still had control of our storage and handling, but we don’t any more.”

Footnote from CBH: Freight excluded. Estimated comparisons based on published fees and charges schedules. Scenario - Standard Wheat, delivered on November 1 to a main/primary country storage, railed to port and exported in April. Outloading and inloading during normal working hours. Assumes use of cheapest product available. CBH rebates assume tonnes sold to CBH marketing and trading.
Camera IconFootnote from CBH: Freight excluded. Estimated comparisons based on published fees and charges schedules. Scenario - Standard Wheat, delivered on November 1 to a main/primary country storage, railed to port and exported in April. Outloading and inloading during normal working hours. Assumes use of cheapest product available. CBH rebates assume tonnes sold to CBH marketing and trading.

Mr Little last year sold nearly 90 per cent of his crop to CBH, above his usual average of between 50 and 90 per cent.

He said ploughing back capital into the network meant growers had well-maintained infrastructure, at the lowest cost to growers.

Mr Little pointed to a chart produced by CBH, left, which compared storage and handling costs between CBH, Glencore and GrainCorp.

“The fact they (CBH) still own all the storage and handling facilities in WA is of huge benefit to the growers in WA, because they are not trying to pay shareholders and make profits,” he said.

“We get charged basically $45 here for storage and handling fees and that is about half of the fees in WA.”

CBH marketing and trading has been operating in South Australia since 2006, when its first office was opened in Adelaide.

There, the company employs a grain services manager and operates a harvest grower centre.

Regionally, it has two business relationship managers — one on the Eyre Peninsula and the other in the mid-north.

In South Australia, for every tonne that a grower sells to CBH, CBH will donate 20¢ to a charity nominated by that grower, with the amount donated depending on the tonnes sold to CBH.

Mr Weckert farms 2600ha of wheat, durum, barley, lentils and peas, as well as 500 Merino ewes and 100 sows.

Australian ownership is one of his main drivers for selling to CBH, but he is primarily price-driven.

“It is mainly about probably price but now we realise there are a lot of benefits,” he said.

“WA growers have the complete control of their supply chain ... it gives them so much more advantage over other players.

“I like that it goes back into the business and the regional areas, rather than just appeasing shareholders and investors.”

It has been three years since the Australian Grains Champion officially presented CBH with a proposal offering members $1 billion cash, backed by GrainCorp — which offered to fund half of the initial $600 million payment to WA grain growers.

A later survey commissioned by CBH, after the company rejected the AGC bid without without allowing members to vote on the proposal, revealed huge support for the co-operative model.

While some growers argue the co-operative structure is holding it back, curtailing its ability to compete in increasingly competitive global markets, Mr Weckert and Mr Little vehemently disagreed.

“My message to WA growers would be, ‘do whatever you can to keep it the way it is, don’t ever change it,” Mr Little said.

“Don’t be lured by the chance to make a quick buck by selling the asset.”

Mr Weckert said his message to WA growers was that they “must keep grower control” in the supply chain because “once it is lost, it is lost forever”.

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