CBH must represent all growers

Former CBH chairman Neil Wandel says he is keen on CBH adopting a structure similar to Eastern States company Devondale Murray Goulburn.

Existing as an unlisted public company, Murray Goulburn Cooperative Co. Limited is 100 per cent controlled by its dairy farmer suppliers and, according to its own website, operates under co-operative principles.

“I am very keen on the Murray Goulburn model, which enshrines the co-operative principle,” Mr Wandel said.

Murray Goulburn’s share standard is calculated based on a farm’s average annual milk production over a rolling three-year period.

A similar methodology, if adopted by CBH, would go a long way to addressing Mr Wandel’s concerns with regard to grower representation.

Speaking to the Countryman this week, Mr Wandel said he still believed it was inappropriate for him to comment on the Australian Grain Champions corporatisation proposal in light of his position as an immediate past CBH chairman, but said he was not sure whether or not the AGC proposal was the way to go.

He said any changes to management of CBH should result in release of the capital value, while retaining grower control.

Mr Wandel has continued to distance himself from the unfolding saga surrounding WA’s grain marketing bodies and industry personalities, with legal action and moves to corporatise the State’s grain marketing co-operative causing division in the industry at a time when wheat prices may well be jeopardising its profitability.

He was reserved in his comments regarding recent media reports, many of which have focused attention on CBH’s threat of legal action against former employee and grain industry consultant, Colin Tutt, believed to be the consequence of Mr Tutt’s involvement with AGC.

Mr Wandel said he hoped the CBH board would be true to its commitment to carry out a complete review of its operations, a commitment made in the wake of increased efforts by AGC to “sell” its proposal to CBH members.

“AGC is entitled to canvass growers for support, and I am not convinced that the current board is committed to a full review of board operations,” he said.

Mr Wandel was criticised by the CBH board earlier this year, when he was quoted by the media in January as “slamming” the incumbent CBH Board at the time, saying it lacked “strategic vision” and that it needed to revise its “co-operative structure and current direction which fails to address mounting competitive pressures”.

At the time, Mr Wandel expressed concerns about CBH diversifying into fuel and fertiliser products for growers and was quoted as saying he was unsure if enough profit margin existed in those activities.

Mr Wandel said his concerns primarily related to that fact that CBH’s management and the existence of a one-grower, one-vote system did not reflect the composition of its producer base.

“The trouble is the 250 growers who grow a quarter of the grain grown delivered to CBH really don’t have much say anymore. There are people growing grain who feel like they have no input,” he said.

“There are 3000 growers who deliver another 25 per cent of the grain and it is these growers that really run the co-op. The 1000 growers who deliver 75 per cent of the grain get out voted most of the time.

“You only need to deliver 200 tonne to be a shareholder of CBH and I have heard of people who buy grain in just to retain their membership.”

Mr Wandel said there were other growers who manipulate their business structures so that they had five valid votes so that they ensure they can financially capitalise, or “get a bigger piece of the pie” in the event of a corporatisation of CBH.

“If CBH members had one vote for every thousand tonne delivered, I believe director elections and any other issues upon which members are asked to vote, would have a completely different outcome,” he said.

AGC states that its proposal “has been developed by WA grain growers and leading professional advisers and that it will establish an ASX listed company with majority grower ownership, unlock growers long-held equity in CBH, converting it into cash and shares, and ensure CBH has the structure and funding to compete strongly on the world stage”.

Mr Wandel said that, marketing issues aside, he was concerned about the outlook for wheat producers with a downward trend in prices looking more likely than upward movement.

“If the price drops below $250/tonne, it is not such an attractive option. Australian wheat may be a little overpriced at the moment, and there is oversupply everywhere,” he said.