A SHORT, sharp quip by Labor Senator Joe Bullock exemplified the passionate defence of CBH’s co-operative structure made by WAFarmers grains council president Kim Simpson at last week’s Senate inquiry hearing on grain logistics in Canberra.
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“I want to make it clear I have not seen Mr Simpson’s ‘I love CBH’ tattoo, but he is certainly a fan,” Senator Bullock told CBH officials.

During his opening statement, Mr Simpson launched an impassioned plea to federal Senators on the Rural and Regional Affairs and Transport References Committee about the inherent value of CBH’s co-op structure to local growers.

“I was mortally insulted by your suggestion that farmers might not know whether they were gaining an advantage out of having a co-operative”But the Ballidu grain grower also took a swipe at the co-op’s most outspoken critics – the Pastoralists and Graziers’ Association (PGA) of Western Australia – and rejected an earlier suggestion during the hearing that younger growers favoured CBH corporatisation.

“My first comment is that I was mortally insulted by your suggestion that farmers might not know whether they were gaining an advantage out of having a co-operative,” he said.

“We do. We are very well aware of it. Even the younger farmers – going to one of your suggestions, Senator Heffernan – are aware of that.

“I suggest that they will not be selling their shares any time in the future.”

Committee chair and WA Labor Senator Glenn Sterle urged Mr Simpson not to “take it personally”.

“I will not back down and you will not back down – but I did not set out to offend the growers,” Senator Sterle said.

“What I asked was whether the ACCC (Australian Competition and Consumer Commission) know that the growers are getting the best deal.

“Secondly, what I do know is that there has been some sort of turmoil in the board.

“I did clearly say that if the farmers were not happy I am sure we would hear about it, so do not take it personally.”

Mr Simpson told the hearing that CBH was a co-operative built by growers, paid for by growers and is run largely by growers, “And it does save us a lot of money”.

“If you compare the freight and handling costs in the west to the freight and handling costs here or in the east, you can see the difference,” he said.

“The difference is getting wider every single year, which is why CBH has the support, in my guess, of somewhere in the vicinity of 90 per cent of WA growers.

“It benefits us in two ways. One is the cost and the other is the fact that CBH maintains 190-odd receival points across WA.

“If CBH were to be sold off tomorrow, I would suggest that probably 90 of those would go. If CBH were sold off and those 100 receival points went, every single one of us that is currently near one of those points would have to turn around and buy a road train or contract people to cart grain.

“That is a cost that is rarely considered when these issues are covered.”

However, Mr Simpson said if a competitor entered the WA market and built storages up-country and offered its services to growers cheaper than CBH can provide “then growers will use it”.

He also agreed with NSW Senator Bill Heffernan’s clarification that “a little group” in WA wants to sell their CBH shares; namely the PGA.

But he said that “very small group” purports to represent growers but “I respectfully suggest that they do not”.

“It is the same as saying that someone who believes the world is flat represents scientists,” he said.

“If anyone represents growers in the West, it is us – particularly in respect of CBH”Mr Simpson said WAFarmers had 30 per cent of WA’s grain growers on its books which is, “nowhere near a majority” while suggesting the next nearest group (PGA) only had 5pc.

“If anyone represents growers in the West, it is us – particularly in respect of CBH,” he said.

“That same group that Senator Heffernan was talking about have talked about corporatising CBH.

“If a poll were taken tomorrow I would suggest that better than 90pc of growers would oppose that.”

CBH chief executive Dr Andy Crane also picked up on questioning about the PGA’s representation of WA growers, saying an issue of “mandate and motivation” was at play.

He said CBH surveyed a sub-set of its members quarterly which provides “reliable data”.

“We ask them particularly about the service that CBH is supplying when it comes to storage and handling, whether we are providing for their needs and whether they are still supportive of the co-operative,” he said.

“When we ask all those growers, ‘Which organisations are you members of?’ our data would say that 7pc of growers are members of PGA and 30pc are of WAFF, but most growers are members of CBH.

“When we analysed their interests, which is what we do – that is what we drive our organisation with – that is where we get the feedback.

“So I do think we are very representative in our views.”

Dr Crane said CBH’s current loyalty score was 88pc with growers.

“An allocation based on historic deliveries would be the model that probably would get up”PGA grains committee chair John Snooke told the inquiry it was a “fair statement” to say PGA favoured capitalisation and privatisation of CBH.

But Mr Snooke said what the PGA would always do firstly was respect CBH members but any change in structure would require 75pc shareholder approval.

He said a debate would determine how the capitalisation would be proportioned to each individual CBH shareholder.

Mr Snooke said a previous model used in the early 2000s – where 58pc of growers voted for a corporatised CBH – used a five-year history of grain deliveries to determine the potential allocation of shares to growers.

“So the more you delivered the more equity you had in the company,” he said.

Mr Snooke said the other argument was that each shareholder gets the same equity irrespective of deliveries.

But he said that model was unlikely to succeed up, “because the bigger growers probably would not be incentivised that way”.

“That is because some of the growers in WA just deliver massive tonnage,” he said.

“Therefore, if they were to get a million dollars, it may not incentivise them there.

“An allocation based on historic deliveries would be the model that probably would get up.”

Ms Snooke said PGA also had about 600 individual grain grower members but he was unsure of the actual number of businesses or actual percentage of the total WA crop.

He said a PGA submission for the ACCC’s investigation into Grain Express totalled 1.2 and 1.5 million tonnes for that particular year, of between 10 and 15pc.

“I could not put a percentage figure on it, but we are the smallest State farming organisation in the country, I believe,” he said.

“I defend our past record.

“We are an organisation based on the principles of the free market and minimal government intervention.

“I admit that is not for everyone, so we have a certain type of member.

“We want to put up good arguments in society.

“That is our goal.

“So we are never going to be the biggest in WA.”

Mr Snooke said CBH has only been successful because it was a legislated monopoly and WA growers had “no other choice” but to use it.

He said anyone who wanted to set up alternative infrastructure was blocked by the State government but that scenario had changed with the current Barnett government.

“They judge a project on its merits – that is a good thing.”

Mr Snooke also rejected suggestions CBH offered a cheaper service relative to the eastern states.

“We hear this all the time,” he said. “It is the PGA’s opinion – after a lot of research – that it is like comparing apples with oranges. It is a completely different geographic State.”

Mr Snooke said on the east coast market growers – situated a long distance from port – had a similar price per kilometre per tonne for grain to that of an average WA grower situated 200km from port.

“So we do not buy that argument,” he said.

“We do have a couple of members in the east who share information with the organisation.

“The biggest point I can make is that, if CBH is the cheapest, why is it that more and more people are choosing the Bunbury port every day and why are companies wanting to build new infrastructure in WA?

“They would not be doing that… if they could not offer growers a cheaper path to port.”

Senator Heffernan said CBH could one day be sold off and the co-op structure changed, creating “a huge private monopoly”.

“I have to say, having watched the SunRice expedition, that the caveat on all of this debate, for CBH, will be if eventually, when dad gives the farm to the sons and the shares to the daughter, they cash it in,” he said.

“In other words, put CBH on the market. It would dramatically alter the whole equation in Western Australia because it would be a huge private monopoly.”

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