Back to the future for CBH
After years of bitter debate, Australia’s biggest co-operative is hoping its decision this week to keep the same structure is enough to quell the criticism and steer CBH forward against a growing tide of multinational grain traders.
CBH chairman Neil Wandel said on Monday the board would stick with its existing structure, but the framework would be better used to return more value to growers.
“Through the course of looking at our whole structure, we probably discovered that under our current structure, we haven’t been using some of the things we could, ” he said.
“You might see us offering a loyalty rebate for some of our storage and handling charges, as we do on our trading side. We are looking at some interest-bearing investments that shareholders can invest in CBH and we can return value to them that way.”
Greater investment in the storage and handling network was also tipped as part of the “enhancement”.
The chairman remained tight-lipped on further details of the proposed rebate or how these investment products would work. But he said some of these new products would be rolled out before harvest.
Two other models were in the mix for consideration — a distributing co-operative and a dual co-operative — but these would have cost CBH its hard-fought tax-exemption for the storage and handling side of the business.
“We have had very minimal support to move to a corporate model, and it was either this model (a non-distributing co-operative) or a distributing co-operative, ” Mr Wandel said.
“We looked at the tax savings for this model — the $10–$12 million a year is $10–$12 million that can be invested either as rebates to reward our growers for patronage or to put into infrastructure. Growers will be happy with this.”
The decision comes three years after CBH last announced restructure plans.
The previous model was to have housed the grain trading and other investments in a separate structure from the tax-exempt storage and handling side of the business.
The heated battle for CBH to restructure has also been played out in recent director elections.
But CBH’s most recent survey — accounting for 1000 of the 4500 CBH grower members — indicated that 24 per cent wanted the WA grain co-operative to list on the Australian Stock Exchange, while 72 per cent wanted CBH to operate under co-operative principals.
“We expect there will be some people who believe we are going the wrong way and we should be corporatising, ” Mr Wandel said.
He said based on what has happened in South Australia and with AWB being taken over by multinationals, he believed growers wanted to maintain control.
“Growers in WA are seeing that now and they don’t want to lose the value they have got, ” he said.
Shareholders will not have to vote on the new structure, per se, but changes to the Co-operatives Act 2009 (WA) means that a vote is required to bring CBH’s constitution in line.
CBH stated a vote on the constitutional changes, which require 66 per cent majority, will take place later this year.
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