CBH re­bate re­liant on crop

Countryman - - FRONT PAGE - Cally Dupe

CBH chief ex­ec­u­tive Jimmy Wil­son has handed down the co-op­er­a­tive’s sec­ond-high­est re­bate in the scheme’s 10-year his­tory, but says grow­ers should not come to ex­pect a re­bate of more than $10 a tonne.

CBH an­nounced last week that farm­ers would re­ceive a re­bate of up to $10.50 a tonne in 2017-18, to­talling $94.5 mil­lion.

It was mu­sic to grow­ers’ ears af­ter the co-op­er­a­tive also an­nounced in June it would slash stor­age and han­dling fees by $4 a tonne from this har­vest.

The 2017-18 re­bate com­prises a $7 a tonne re­bate from the mar­ket­ing and trad­ing di­vi­sion, to­talling $48 mil­lion, and a $3.50-a-tonne re­bate from the op­er­a­tions di­vi­sion, to­talling $46.5 mil­lion.

How­ever, Mr Wil­son said it would be “very brave” to as­sume grow­ers could come to ex­pect a re­bate of more than $10 a tonne each year, say­ing the re­bate was partly de­pen­dent on how much grain WA farm­ers har­vested and de­liv­ered to CBH.

“The size of the crop does play a very sig­nif­i­cant role,” he said.

“If we have a smaller har­vest we would not be able to pay those sorts of re­bates to grow­ers.”

CBH, es­tab­lished in 1933 and owned by more than 4000 WA grain grow­ers, has of­fered the re­bate each year since 2009, when it was first launched at $2.95 a tonne.

The re­bate re­duces stor­age and han­dling fees for the fol­low­ing year, and hit a a record high in 201617 at $12.75 a tonne, to­talling $156.3 mil­lion.

Mr Wil­son said CBH man­aged to pro­vide a sig­nif­i­cant re­turn while con­tin­u­ing to in­vest in the net­work, by spend­ing about $200 mil­lion on net­work cap­i­tal and main­te­nance this fi­nan­cial year, with more planned for next year.

“Of this spend, more than $130 mil­lion in­cludes stor­age and through­put en­hance­ment projects at sites and ter­mi­nals across the net­work, the ma­jor­ity of which is to be com­pleted in time for the 201819 har­vest,” he said.

The 2017-18 re­bate was the high­est mar­ket­ing and trad­ing re­bate

on record, but there was no re­bate from the in­vest­ment di­vi­sion. Mr Wil­son said CBH opted not to give WA grow­ers an in­vest­ment re­bate this year par­tially be­cause of its Asian flour miller In­ter­flour’s un­der­per­for­mance, which has been blamed on stiff­en­ing com­pe­ti­tion and low mar­gins in In­done­sia and Malaysia.

“They play in a very cycli­cal mar­ket, their per­for­mance hasn’t been that good,” Mr Wil­son said.

“We an­tic­i­pate its per­for­mance will be bet­ter next year. There is a very sig­nif­i­cant turn­around plan in place at the mo­ment.”

CBH bought a 50 per cent stake in In­ter­flour with In­done­sian bil­lion­aire An­toni Salim in 2005 with the aim of cash­ing in on In­done­sia’s bur­geon­ing wheat con­sump­tion, which has more than dou­bled in the past 15 years.

While CBH will hand down its fi­nan­cial re­sults in Jan­uary, Mr Wil­son said its oat milling and pro­cess­ing com­pany Blue Lake Milling had been prof­itable and CBH had re­tained the profit to sup­port the busi­ness “in fu­ture cap­i­tal ex­pen­di­ture”.

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