CBH Group CEO Jimmy Wilson to cut costs

New CEO Jimmy Wilson says he will focus on cutting costs and ensuring market transparency at Australia’s largest cooperative.

Wheat demand is predicted to grow by 13 million tonnes in the next decade. But at the same time, the supply of wheat will soar by 17 million tonnes a year. Photographer: Carla Gottgens/Bloomberg

Costs can still be pruned from the transport, storage and handling systems of Australia’s largest grain exporter, CBH Group, according to its new chief executive and former BHP iron ore boss, Jimmy Wilson.

Mr Wilson, talking to the media after his first month at the helm of CBH, said his focus as chief executive would be to cut costs and ensure market transparency at Australia’s largest cooperative, at a time when the global grain market is becoming increasingly competitive.

But the cost-cutting may be at the expense of the scale and scope of CBH’s grain delivery network, meaning some farmers have to truck their harvested grain further to meet the rail head and CBH delivery silos.

In Asia, where most of WA’s annual wheat crop wheat is sold to turn into flour and noodles, Mr Wilson said wheat demand is predicted to grow by 13 million tonnes in the next decade.

But at the same time, the supply of wheat — much of it from the Black Sea region of the Ukraine and Russia — will soar by 17 million tonnes a year.

“On farm, the growers are innovative and world competitive; it’s up to CBH to do its bit too,” Mr Wilson said yesterday.

“CBH owns [contributes] to 26 per cent of the value chain of grain; I do know [from my past experience with BHP Iron Ore] there is always an opportunity to reduce costs [by] rationalising network points and procuring more efficiently.”

Mr Wilson said he was a firm believer that the cooperative structure remained the best one for CBH, delivering optimal financial rewards to the grain business’s 4100 farmer-owners.

Two years ago, a group of large WA grain growers mounted a challenge to the cooperative’s structure, seeking to inject capital into the $3 billion cooperative and float it on the ASX, releasing stored value back to its farmer-owners.

“If I was a grower, I’d be keen on CBH remaining a cooperative; the essential nature of this business is that it is bunch of growers who want to get their grain onto the world market as efficiently and cost effectively as possible,” Mr Wilson said.

“To do that, the cooperative model works best, but I will still be running this business like I would any corporation.”

Mr Wilson said that after a tough dry start to the WA growing season, it now appears likely WA will harvest a grain crop just below average size, of between 11-12 million tonnes.

He said that while CBH would be a little less busy than last year after a 16.6 million tonne crop was delivered; at least the overall harvest had improved on early predictions with late spring rains, while the Esperance district in WA is enjoying an ideal season.