- Grains president John Snooke says industry needs to have the discussion
- NSW farmers caution against move
IN SPITE of an ongoing commitment from the CBH board to retaining the company’s co-operative structure, there is a renewed push from parts of the WA farming sector to have the company corporatised.
President of PGA Western Grain Growers John Snooke said his organisation, formed on a belief in free marketing, said now was the time for CBH to be corporatised.
“There are efficiencies that could be made by privatising the co-operative model and it will also release equity,” Mr Snooke said.
However, he said the major reason PGA wanted to move towards privatising CBH was that they believed CBH was at the zenith of its value.
“We’re seeing competition introduced in the ports in WA and that is going to impact on CBH.
“Shenhua are operating out of the port of Albany and Bunge are opening at Bunbury and that is going to impact on the tonnes that go through CBH.
“Whatever way you look at it, that’s going to dilute the value of CBH, this is the high water mark for the value of CBH.”
But a Central West NSW farmer says WA farmers should be looking to protect their unique asset – a farmer-owned and operated bulk handler.
Graham McDonald, Condobolin, said farmers in his area, which is one of the furthest from port in NSW and hence incurred higher freight costs, were worse off than before GrainCorp was privatised.
“A private company is going to look after itself first, and its customers second. I acknowledge there’s extra capital freed up but there isn’t the charter to look after growers’ interests.
“I think a corporate model would see sites being shut down.
“We think CBH, as it currently stands, is the best thing ever for growers, and I’d advise WA farmers to think very carefully before changing its format.”
Mr Snooke acknowledged corporatisation would lead to a reduction in bulk handling services but said greater efficiencies at the major sites would make up for that.
“Farmers now generally have a truck and it would be easier to cart a little further to larger, more efficient sites than to retain a large network of inefficient sites.”
Mr Snooke said he was excited by the possibility of three competing storage and handling supply chains existing in WA.
“I think the competition will work out to be a good thing for growers across the state.”
“It will be a different situation to South Australia where they essentially switched one monopoly for another, we’ll have more competition.”
While it was not PGA’s major reason for pushing for corporatisation, he said the release of equity would also be valuable.
“You listen to the reports, and there’s $12 billion worth of debt in WA agriculture, the banks are telling us this isn’t a sum that can simply be traded out of, it’s going to require a huge injection of capital, and perhaps the sale of CBH could be part of that.”
Mr McDonald said there were eerie similarities between the current situation in WA and what was happening when GrainCorp was privatised.
“I’m hearing parts of WA are suffering with drought, and there is a lack of capital about.
“That’s exactly what happened when we got our GrainCorp shares.
“We were told the only way we’d lose control of the company was if we wanted to, if we sold the shares, but the problem was that cockies were broke, they needed the money and they sold their shares.
“I can see a similar story unfolding over there if farmers are looking to get together enough cash to put the crop in and the banks aren’t that keen on funding it.”
Fellow central west producer and NSW Farmers grains committee member Terry Fishpool agreed, saying the corporate model had not delivered for growers.
“I definitely think WA growers should fight to retain the co-op model.”
“The problem with a listed company is that the priority is always on returns for the shareholders, not delivering value for the growers.”
