Renewed call for CBH restructure

Dorothy HendersonCountryman
Nils Blumann, pictured at his Esperance property last week, says it is time for a change to CBH’s structure to reflect the modern industry and improve corporate governance.
Camera IconNils Blumann, pictured at his Esperance property last week, says it is time for a change to CBH’s structure to reflect the modern industry and improve corporate governance. Credit: Countryman

Well-known Esperance identity and graingrower Nils Blumann has reiterated his call for CBH to keep up with the times and change its structure to suit.

Mr Blumann, who has been farming on the Esperance sandplain for the past 60 years, has long been a staunch advocate for changes to the corporate framework of CBH.

He said while the co-operative model may have served the group and its growers well in the past, its growth to an organisation which had about 4200 grower members and had handled close to 16 million tonnes of grain during a harvest meant that structure was outdated.

He said many growers had misconceptions about ownership of CBH.

“Grower shareholders believe that they own the company. The only thing member shareholders own is a total, Statewide, of $8500 worth of equity in the $1 billion company,” he said.

“If CBH was demutualised, the only beneficiary would be the State of Western Australia.”

But Mr Blumann said efforts for reform had been stymied by some directors averse to change.

“The current structure does not allow for effective governance for CBH, despite directors peddling the myth that CBH is grower-controlled, when in reality the same directors controlled the company,” he said.

“It is strange and inappropriate that all members can vote for three non-grower directors, whereas the balance, who under the constitution do not need any skills, are elected from five ‘electorates’ by popular vote on to the CBH board.”

Mr Blumann also said that the argument that the current structure should be retained because the company was exempt from paying tax was irrelevant, pointing out that if CBH did pay tax, it might be a more effective force when negotiating with government.

“If CBH paid tax, and was seen to support taxpayers in some way, it might be able to better bargain when fighting for retention of government-provided services, like the Tier 3 lines,” he said.

“The rail lines were shut after they were deemed unsafe and commercially unviable, locking CBH in a battle over access.”

Mr Blumann said that in 2000, the CBH board rejected proposed structural changes which would have “brought it into the 21st century” by introducing a structure more suited to its business and the number of growers it served.

However, Mr Blumann did not back the Australian Grain Champions corporatisation proposal recently presented to growers.

He said that while there was merit in some of the group’s ideas, he did not think it was the right model to put to members, saying that unless the board agreed to it, it would be “a waste of time and money”.

“The change needs to come from within the organisation, and also be supported by its member shareholders, for it to be effective,” he said.

Mr Blumann said one good thing that came out of the AGC proposal was that it exposed in greater clarity the rules regarding grower ownership and share of full equity of CBH.

“CBH has outgrown its own structure, when 25 per cent of the members deliver less than one per cent of the grain in contrast to approximately 250 growers delivering over 25 per cent of the total received by CBH,” he said.

This view was also expressed by former CBH chairman Neil Wandel in an exclusive interview withCountryman a fortnight ago.

This is not the first time Mr Blumann has spoken out about CBH governance.

In September 2009, he organised a series of meetings for CBH member shareholders, which debated asking the CBH board to proceed with demutualisation.

In 2010, Mr Blumann proposed a cut in the number of grower-elected directors on the CBH board from nine to four.

Get the latest news from thewest.com.au in your inbox.

Sign up for our emails