Grain handler and marketer CBH Group is currently Western Australia’s largest not-for-profit business, but whether it retains that status depends on a review of the best way to serve its members.
Grain handler and marketer CBH Group is currently Western Australia’s largest not-for-profit business, but whether it retains that status depends on a review of the best way to serve its members.
CBH heads a disparate list of cooperatives, public companies and other entities that are defined in WA Business News Book of Lists as not-for-profit businesses by their member ownership and member focus (see page 20).
Most actually make a profit but use that money to benefit members rather than distributing it to shareholders.
CBH tops the list with revenue of $1.7 billion, which makes it larger than most for-profit businesses in WA.
The list includes health insurance group HBF, hospital operator St John of God Health Care and motoring and insurance group RAC.
Central buying groups on the list include Co-operative Purchasing Services and Capricorn Society, which has converted from a cooperative to a public company but still operates according to cooperative principles.
Rural businesses on the list include the Geraldton Fisherman’s Co-op and the WA Meat Marketing Co-op.
CBH has undergone significant change in the last 12 months, with a new chief executive in Andy Crane and rebranding of all divisions under the CBH name.
In addition, CBH is reviewing its structure and is currently in the process of gathering member opinions with the help of an independent surveying company.
However, recent board elections consolidated the position of those who wanted CBH to remain a cooperative.
Mr Crane told WA Business News the group’s goal is to maximise returns to its grower members.
Currently CBH generates the majority of its member revenue through its partially tax-exempt storage and handling business.
“Our current structure means the method of returning that value in the supply chain to growers is very limited,” Mr Crane said.
“We have been working with growers to understand how else they might want that value returned to them and we are in a listening phase at the moment”.
That listening phase will finish in May and the company hopes to bring structures to the board and ideas to growers in September.
“We won’t consider structures until it is very clear how the growers want revenue returned to them, then we’ll work with the board on judging certain key criteria,” Mr Crane said.
At the recent CBH annual general meeting the group’s chairman Neil Wandel said “the options are many and include better service, discounted service, rebates, distribution of equity and dividends”.
CBH has been investigating structural alternatives over the last several years and it has been a key project for the group.
“In the last couple of years we have looked at other similar scale co-operatives around the world to understand how they have wrestled with similar issues of capital raising and member value and yes all those ideas will go in to the melting pot,” Mr Crane said.
One of tho possible structures is that of New Zealand cooperative and global dairy giant Fonterra.
Fonterra’s 11,000 dairy farmer owners voted last year to change the capital structure by increasing the percentage of shares each farmer could own relative to their production and restricting the share value by reflecting in the share price the fact only farmers own shares in the business.
“Many of our shareholders have made it clear that they want to retain 100 per cent farmer control and ownership of their cooperative and they have indicated they are prepared to support Fonterra’s ongoing growth by providing additional capital to fund profitable business opportunities” Fonterra’s chairman Sir Henry van der Heyden said in a statement.
The CBH review follows major changes by other rural cooperatives in WA.
The state’s largest industrial company Wesfarmers started life as the Westralian Farmers Cooperative many years ago. Its main rural link now is through its CSBP chemicals and fertilisers division.
Summit Fertilisers was bought by Japanese corporation Sumitomo in 2005 while United Farmers Cooperative was bought by New Zealand fertiliser cooperative Ravensdown in 2008.
