Opinion: CBH must return to ‘fundamental co-operative principles’, says Grain Bulk Handlers Association deputy

As a life member of WAFarmers and ex-president of its grains council, I have grave concerns regarding the council’s apparent disregard for the co-operative principles. CBH as a co-operative plays a very important role in the viability of grain growers in WA and CBH must continue improving its infrastructure where practical. The current president of the grains section said in a recent interview on ABC’s Country Hour that most growers would want the profits of CBH grain marketing and trading (M&T) put into infrastructure, or words to that effect. The Grain Bulk Handlers Association (representing CBH shareholder members) believe it is vitally important infrastructure is improved as soon as possible so that most of the grain is sold and shipped out over the seven or eight months after harvest. CBH needs to use storage and handling to generate funds for infrastructure, so all that use CBH facilities pay for the investments equally on a per tonne basis. There are a number of concerns I have with the grains council president’s statement. 1) Do a majority of the grains section support this view? 2) His comments have the potential to, at the very least, divide members of our organisation. 3) Education of our members is required if we are to keep with co-operative principles. CBH needs to return to the fundamental principles of the co-op that were successfully set up many years ago. CBH should lift the self-imposed limit of purchasing up to only 50 per cent of the crop because it gives other grain merchants an advantage. CBH should be developing a least-cost path from paddock to port, extending and improving the use of rail, with the aim of containing and over time reducing the cost of handling and transport. CBH can fund system upgrades in the traditional manner which ensure that the cost is not borne disproportionately by those who sell grain through the CBH trading arm, but is spread equitably over every tonne of grain stored in the system over the life of the asset. The way to fix this error of judgment would be to look at different ways profits could be distributed to growers and how infrastructure costs could be paid more fairly. CBH should be concentrating on maximising returns to growers at the farm gate level. If M&T distributed all profits to patrons on an equal basis, there would be no tax. Bonuses for staff should only be geared to grain sold above world parity prices which should help maximise shareholder returns. Bonuses shouldn’t be paid on the profits of M&T. CBH, being a co-operative, is in a very good position to set high benchmark prices for grain, rather than concentrating on buying grain cheaper to make a profit for M&T. By paying a higher price for grain, other marketers would have to pay a similar price, therefore every grain grower throughout WA would reap the benefits. By increasing grain prices over the past three years, growers across WA could have received more than a billion dollars for their hard work. The multiplier effect to the economy should not be overlooked. I hope CBH can see the error in their ways and stop using M&T as a cash cow. CBH has a great credit rating and can borrow large sums of money very cheaply. Farmers, on the other hand, pay higher interest rates when borrowing money. The profit after tax for 2022-23 was $176 million. If they were to pay the $176m out to growers and replace it by an amortised loan, then S&H would have to charge only $1.04 per tonne over 15 years at 4 per cent, based on an average of 15 million tonne crop per year. If all the profit before tax from M&T was paid to growers, they would have received up to $26 per tonne, minus a storage and handling fee of $1.04. I am sure it would have been a great help to finance this year’s cropping expenses knowing that many farmers ran at a loss last year. The grains council needs to ask itself: Is it fair that only 43 per cent of the tonnes that use the system made the profit for M&T to pay for infrastructure, while the remaining 57 per cent of the tonnes don’t contribute? Growers who agree can sign the petition at our website. Bob Iffla is a farmer in WA’s Great Southern and deputy chair of the Grain Bulk Handlers Association