CBH slashes cost of overhaul

Brad ThompsonThe West Australian
CBH slashes cost of overhaul
Camera IconCBH slashes cost of overhaul Credit: The West Australian

CBH has slashed $250 million from the projected cost of a blueprint for reshaping its vast but ageing grain receival, storage and handling network in WA.

The co-operative, feeling the heat of criticism from former chairmen and a well-organised corporatisation campaign, now plans to spend $750 million, rather than $1 billion, on the network over five years from 2016-17. This is less than the $898 million it spent on capital works and maintenance over the past five years.

CBH revised the budget just months after announcing the $1 billion network blitz and holding scores of meetings to brief its 4200 grower members. It said the figure was revised after grower evaluation and based on external engineering advice. “As a result of this review process, far greater efficiencies and cost savings have been gained than our original projections which were conveyed to you at the pre-harvest meetings,” the directors told growers.

The CBH board now believes it can achieve the goal of delivering an “efficient and competitive supply chain from surpluses obtained from average harvests without the need to increase storage and handling costs”.

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CBH chief executive Andy Crane said yesterday the aim was to keep any storage and handling fee increases below CPI while rolling out a strategy to get two million tonnes of grain a month to port in times of peak demand when marketers could attract the highest prices.

CBH will focus investment on key receival sites to speed up turnaround times for growers while other sites are phased out.

“Spreading capital and maintenance across 197 sites is not the best way to manage the network nor keep fees under control,” Dr Crane said. “We have 100 sites that take 10 per cent of the crop.” He stressed he was not saying 100 sites would close.

The board has also indicated it will consider differential pricing for growers if a review by WAFarmers finds it has merit.

The revised spending plan covers everything from port upgrades to the purchase of oil and tarpaulins.

A move by Australian Grains Champion to muster support for corporatisation has led prominent growers to question the direction of the board.

It has also sparked a legal stoush between CBH and former executive Colin Tutt, who has engaged high-profile lawyer Martin Bennett.

The savings CBH found after a review of its $1 billion plan to reshape its network.

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