Call for CBH entitlement review

wagrainsgroup1 —  June 30, 2016


Thursday, 30 June 2016 1:40PM

The WA Grains Group has called for the issue of transferring entitlements to be addressed as part of the review of CBH, noting some of its members were being disadvantaged by dated co-operative rules.

According to the WA Grains Group, the current rules of CBH, under the Active Membership Requirements were written before such entitlements as rebates and loyalty payments existed, so at a value of $2 per share, transferring entitlements was not a huge issue.

But after Australian Grains Champion’s corporatisation proposal, the share that growers hold in CBH is now considered far more valuable than the $2 received when exiting farming or retiring, because of accrued entitlements based on grain deliveries.

WA Grains Group chairman Doug Clarke said after AGC highlighted the market value of CBH to growers, it is now recognised the value of these entitlements is considerable and issues could arise where divorces occurred or partnerships and sharefarming agreements are dissolved.

For example, if two farmers were farming in their own right entered into a sharefarming agreement they would receive a new delivery number. Under the current system, after three years of not delivering under their own number, they lose entitlements such as grower rebates, loyalty payments and freight rebates.

Meanwhile, grain delivered under the sharefarming arrangement would also not count towards entitlements on their individual accounts when that arrangement was dissolved.

Among those affected are the Stacey family of Yealering. Peter and Jenny Stacey last year entered into a sharefarming arrangement with their son and daughter-in-law David and Veronica, as part of a long-term succession plan.

They registered as sharefarmers with CBH and the National Grower Register to deliver grain under the Sharefarm Delivery Number.

“It has since come to our attention that the tonnages, once delivered, are not transferable back to the two entities that are sharefarming when that agreement ends,” he said.

“This is despite the fact CBH can split the tonnages into both entities once in storage for their own purpose for invoicing for receival and freight costs etc.

Mr Stacey said very few were aware of this disadvantage to growers, including farmers themselves, accountants, farm consultants and even those at the top of CBH.

He said the rules need to be changed so that growers entering into a sharefarm arrangement and delivering grain under a sharefarm number could have the tonnages that belong to their respective entities transferred across to their entities for entitlements. This would protect their history of deliveries to CBH and ensure they did not miss out on any entitlements that may arise in the future.

Mr Stacey said he had spoken and written to CBH chairman Wally Newman over the issue.

Mr Newman said in a letter replying to the Staceys the process for applying tonnes delivered under sharefarming arrangements simply applied CBH rules regarding what constitutes active membership, in accordance with CBH’s legal requirements. He said the points raised would be considered in any future review of CBH’s rules.

But Mr Stacey said he wanted the situation reviewed urgently to ensure his family were not disadvantaged. He noted his membership of WAMMCO did not carry the same restrictions for sharefarming arrangements.

“We do support CBH and Wally Newman, but as it stands the current system is not working for us,” he said.