AGC pushes for change

This week, the company put in a bid, backed by GrainCorp and superannuation fund HRL Morrison, to commercialise CBH.

Director of AGC Clancy Michael said he wanted to see a 21st century grains business in Western Australia.

“The CBH model has served us well, but it is time for a change.”

He said AGC’s primary focus with its proposal was simple.

“We want to increase the amount of grain we can get to market in our premium time slot, from January to May, which will be a win for Western Australian growers.”

To this end, he said the AGC proposal would allow CBH to operate more nimbly and access more capital.

“Obviously a benefit of corporatisation is the access to more capital, while a change in structure would also help operationally.”

Detractors of the proposal argue it will fall at first hurdle, the requirement that it gets 75pc approval from CBH co-op members at vote.

Statistics used by some within the industry suggest up to 90pc of CBH members favour a co-operative structure.

However, Samantha Tough, another AGC director, says she believes these figures may be inaccurate.

“I don’t think we should use those sort of figures as a litmus test,” she said.

“During the process of getting our proposal ready, we spoke to a lot of growers and we found a lot of support.

“There has not been a corporatisation proposal go to vote at CBH in over 15 years, when there was around 60pc of voters looking for change.

“Added to that, members have never had a fully costed, well formed plan in front of them, so I certainly don’t think it is an impossible task.”

Mr Michael said AGC’s business partners had been hand picked for their strategic pick.

“GrainCorp fitted the bill as an Australian agribusiness with experience in grain storage and handling,” he said.

“We wanted to work with an Australian company.”

Superannuation fund HRL Morrison were approached because of their previous investments in agriculture.

“It is important when working with investors that they understand the cyclical nature of earnings in agriculture,” Ms Tough said.

“HRL Morrison have experience in the area and were a great fit.”

Mr Michael said AGC saw a real need for modernisation.

“Competition is here already in Western Australia and we want to have a business that has the tools to operate in that space.”

Ms Tough said the changing face of the industry could be summed up by the decline in numbers of grain growers since the last CBH vote on commercialisation.

“In 2000 there were 10,000 grain growers in WA, now there are only 4200,” she said.

Mr Michael said the proposal had been carefully formulated to ensure growers retained control of the business.

“Growers will the major shareholders in the business if it is listed, and there will be grower directors on the board.”

“We know that if the proposal is to get over the line, growers need to feel they can access the business and have their voice heard.

“To this end, we will also ramp up the CBH grower advisory councils and establish grower liaison offices to ensure the business remains in close touch with its grower customers.”