Harvest size to keep lid on future CBH rebates
CBH chief executive Jimmy Wilson has handed down the co-operative’s second-highest rebate in the scheme’s 10-year history, but says growers should not come to expect a rebate of more than $10 a tonne.
CBH announced last week that farmers would receive a rebate of up to $10.50 a tonne in 2017-18, totalling $94.5 million.
It was music to growers’ ears after the co-operative also announced in June it would slash storage and handling fees by $4 a tonne from this harvest.
The 2017-18 rebate comprises a $7 a tonne rebate from the marketing and trading division, totalling $48 million, and a $3.50-a-tonne rebate from the operations division, totalling $46.5 million.
However, Mr Wilson said it would be “very brave” to assume growers could come to expect a rebate of more than $10 a tonne each year, saying the rebate was partly dependent on how much grain WA farmers harvested and delivered to CBH.
“The size of the crop does play a very significant role,” he said.
“If we have a smaller harvest we would not be able to pay those sorts of rebates to growers.”
CBH, established in 1933 and owned by more than 4000 WA grain growers, has offered the rebate each year since 2009, when it was first launched at $2.95 a tonne.
The rebate reduces storage and handling fees for the following year, and hit a record high in 2016-17 at $12.75 a tonne, totalling $156.3 million.
Mr Wilson said CBH managed to provide a significant return while continuing to invest in the network, by spending about $200 million on network capital and maintenance this financial year, with more planned for next year.
“Of this spend, more than $130 million includes storage and throughput enhancement projects at sites and terminals across the network, the majority of which is to be completed in time for the 2018-19 harvest,” he said.
The 2017-18 rebate was the highest marketing and trading rebate on record, but there was no rebate from the investment division.
Mr Wilson said CBH opted not to give WA growers an investment rebate this year partially because of its Asian flour miller 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.
While CBH will hand down its financial results in January, Mr Wilson said its oat milling and processing company Blue Lake Milling had been profitable and CBH had retained the profit to support the business “in future capital expenditure”.
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