Pick of the Crop - Autumn 2017

NEWS FROM YOUR CO-OPERATIVE

PICKof THE CROP AGM Forum gives growers greater insight into CBH

2 Grower Value Statement

3 GAC Nominations

4 Grower Study Tour heads to Vietnam

5 A look at the Vietnamese market

6 DailyGrain pricing

8 Community Corner

AUTUMN 2017 ISSUE | FORTY SIX

More than 200 people attended the recent CBH Member Forum and AGM to hear in more detail about the performance of each key business unit of CBH, including Operations, Marketing and Trading and Investments.

CBH’s Chief Executive Officer, Dr Andrew Crane, notes that this is the first year the new Member Forum has been included with the AGM. “There has been a lot happening across the business over the last year, with the announcement of the Network Strategy and our Structure and Governance review, and we wanted to use the AGM to engage with our grower members openly and directly about the performance and focus of each business unit and to ask any questions they may have,” Dr Crane said.

Growers had the opportunity to hear from David Capper, General Manager of Operations and discuss the storage, handling and shipping network, Jason Craig, General Manager of Marketing and Trading on grain marketing and market outlook, and Ben Macnamara, CBH Commercial and Business Development Manager, about CBH’s investments.

In addition, growers were able to hear directly from Greg Harvey, Managing Director and Chief Executive of Interflour and Ben Abbot, Chief Executive Officer of Blue Lake Milling.

“We often get questions about our investments, so it was a good opportunity to provide a more in-depth look at the reasons behind why these investments were made in the first place and how they deliver value to our growers,” Dr Crane said.

Operations: • Invest in the network – an efficient, cost-effective network and keeping costs low.

• Drive Business Efficiency – harvest planning, scheduling, innovation and procurement.

• Below rail access remains a key focus through the arbitration process.

Marketing and Trading: • Maximise rebates through profitability and opportunities to capture additional margin along the supply chain (i.e. ocean freight).

• A continued focus on business efficiency and cost savings.

• Maintain market share in Australia and key markets.

Investments: • Our investments currently include Interflour (IFHL), Blue Lake Milling (BLM), Newcastle AGRI Terminal (NAT), and Australian Bulk Stevedoring (ABS).

• Focus for all our investments in 2017 is to generate rebates to off-set growers’ storage and handling fees.

“The day was a great success and we received lots of good feedback from growers on the day. We’ll look to continue with this format in coming years.”

• IFHL – focus is on new projects coming online in 2017 include InterMalt malting facility in Vietnam and a new flour mill in the Philippines.

For those who were unable to attend the AGM and Member Forum, here is a snapshot of the focus for each business unit for 2017:

• BLM – focus on expansion through the new Forrestfield processing plant, due for completion in 2018.

02 | CBH GROUP

GROWER VALUE STATEMENT CBH’s Direct to Vessel service offering resulted in ~$730,000 returned to WA growers through rebates.

DIRECT TO VESSEL The introduction of CBH’s new Direct to Vessel storage and handling service option for the 2016-17 harvest has resulted in around $730,000 returned to growers through receival fee rebates.

CBH Group Acting General Manager of Operations, Gavin Bignell, said the Direct to Vessel service was introduced as another way to create efficiencies along the supply chain with both growers and marketers benefitting from the efficiencies of working together.

“Direct to Vessel gives growers the ability to sell grain for export on specific vessels, which are identified and communicated to growers by grain marketers. Growers are then required to deliver grain direct to port within a fourteen day window preceding the ship’s arrival,” Mr Bignell said.

“The response from both growers and marketers was extremely positive.

We had a total of 358 growers using the service during the 2016-17 harvest, with 22 vessels loaded amounting to 193,000 tonnes. In addition, five grain marketers, including CBH Marketing and Trading, used the service to export grain from Western Australia.

“This is a great outcome and we are committed to continuing to look for opportunities to further improve our services to growers and marketers.”

This year’s Grower Value Statement was recently mailed to all growers. Here’s a snapshot of the highlights for the last financial year and the season just gone.

FINANCIAL HIGHLIGHTS 2015-16 $2.1 BILLION in grain payments made to WA

growers.

$62.7 MILLION record rebate provided to off-set storage and handling fees made up of: • $48.5 million for 2015-16 deliveries • $14.2 million for 2014-15 deliveries

$132.4 MILLION invested in capital works and maintenance on the storage and handling network. $16 MILLION in recurrent efficiency savings across the business. $1.8 MILLION invested in regional communities through sponsorships and grants.

VALUE IN USE 2016-17 QUALITY OPTIMISATION delivered an additional $3.68 per tonne on average to growers’ wheat sales.

$100 MILLION in transport savings delivered to WA growers when compared to grain freight in South Australia. $196 MILLION in storage and handling savings when benchmarked against the rates of all major storage and handling providers in Australia.

AUTUMN 2017

CBH GROUP | 03

CBH’S GAC OFFERS A GREAT OPPORTUNITY FOR GROWERS With nominations to join CBH’s Growers Advisory Council (GAC) currently open, we thought we’d speak to immediate past GAC Chairman, Andrew Todd, to find out more about what the GAC offers potential nominees.

Andrew, can you tell us a bit about yourself?

I farm at Dowerin with my parents, wife and three daughters. We run a continuous cropping operation of around 4,000 hectares.

I have been a member of the Growers Advisory Council for close to 5 years now and was the GAC Chairman for the past 3 years.

What made you want to join the GAC in the first place?

I put in a nomination to join the GAC after going to South East Asia on a Grower Study Tour, where I got to meet a number of growers who were already GAC members at the time. I hadn’t been aware of what the GAC was before that trip but having that exposure to other growers on the GAC gave me an appetite to learn more about the business.

I was starting to become more and more aware that CBH was a lot more than the receival points that we see up country and I wanted to further my knowledge about CBH. Joining the GAC seemed like a good way to do that.

What would you say to anyone thinking of nominating to join the GAC? If you’re thinking about nominating for the GAC, I’d really encourage you to do it, because it’s not a massive time commitment; it’s a really good opportunity to meet other growers who have a similar interest to you; it’s an opportunity to meet the Directors and people within the business; and it’s probably a twoway relationship – you get as much personal development out of it as you will be able to contribute back to the business with your thoughts and ideas.

To hear more from Andrew on his experience on the Growers Advisory Council or for more details on how to nominate to join the GAC, go to www.cbh.com.au/about-cbh/membership/gac With Andrew deciding to step down from the GAC this year, a new Chair and Deputy Chair were recently appointed.

Congratulations goes to Michelle Barratt from Munglinup, who has been appointed as the new GAC Chair, and Royce Taylor from Lake Grace, who takes on the role of Deputy Chair.

What have you learnt from your time on the GAC? I’ve got a huge amount out of it. I’ve met some great people. The organisation is full of really passionate people and it’s always good to be around people who are working towards a common goal.

Being on the GAC has also been a great personal and professional development opportunity for me. When you get into the boardroom of an organisation of the scale of CBH, and you meet the people who are making the decisions and understand the strategies, and have the opportunity to be involved at that level, it’s exciting and can be inspiring as well.

Andrew Todd, GAC Immediate Past Chairman and grower from Dowerin.

MAKE A DIFFERENCE TO YOUR CO-OPERATIVE. JOIN THE GAC cbh.com.au/about-cbh/membership/gac AUTUMN 2017

04 | CBH GROUP

GROWER STUDY TOUR HEADS TO VIETNAM The 2017 CBH Grower Study Tour will be heading to Vietnam this July and will include a visit to Interflour’s new malting facility, InterMalt.

We spoke to one of last year’s Grower Study Tour participants – Stephanie Bligh-Lee from Mingenew – to find out about what the experience can offer growers.

Stephanie, can you tell us a bit about yourself and your farming operation?

Last year’s tour participant Stephanie Lee Bligh standing on top of Interflour’s new InterMalt facility at Cai Mep port in Vietnam.

I am a partner of Bligh Lee Farms in Mingenew, which I operate with my husband, brother and sister-in-law. We farm predominantly wheat, lupins, barley, canola and oats. We also farm sheep for meat and wool production.

What made you apply to go on the Grower Study Tour?

Well, it was my husband who actually nominated me for the tour (without my knowledge!) but at the end of the day, it turned out to be one of the best things he’s ever done.

I have to confess that I didn’t really know a great deal about CBH and the markets that our grain goes into at the time, so the tour was definitely an eye opening and positive learning experience for me.

What were some of the highlights and key learnings from the Grower Study Tour for you?

The highlight for me, apart from meeting the other growers on the tour, was visiting Vietnam and China and getting a real sense of the sheer scale of the population and markets for our grain over there.

The work that Interflour is doing over in Vietnam, with their flour milling operations and the new malt facility that is being built, is really impressive and I can see how that is adding value to our grain for the long-term.

China was also very interesting, particularly when you consider all the trade barriers that exist within the country.

I got a good appreciation for the effort that CBH puts into our overseas investments and marketing activities in these countries and how important it is to build and continually maintain these relationships for the benefit of growers back home in WA.

What would you say to those considering applying for future tours?

I encourage anyone to apply, especially if you don’t know a lot about CBH or the industry and markets beyond delivering to the local receival point.

As well as being able to meet a range of wonderful growers from all across WA, the tour gave me the opportunity to gain a better understanding of both CBH and the markets that our grain goes into. It also gave me a good understanding of the commercial arm of the business and the reasons behind CBH’s investment into these markets.

Keep an eye out in the next edition of Pick of the Crop to see which lucky growers have been selected to join this year’s tour.

AUTUMN 2017

CBH GROUP | 05

A LOOK AT THE VIETNAMESE MARKET This year’s study tour involves a six-day trip through Vietnam, coinciding with the grand opening of Interflour’s new InterMalt facility, located at the Interflour Cai Mep Port. Growers will also have the opportunity to visit various customers and end-users, local markets and ports.

Here, we take a brief look at the Vietnamese market.

Wheat CBH is one of the top suppliers of Australian milling wheat into Vietnam, with a market share of around 35-45%. CBH has a strong relationship with major millers which will continue to assist in having a strong presence in the Vietnam market.

Vietnam imports around 2 million tonnes of wheat annually. Of this, around 1.5 million tonnes is used for flour milling and the rest for feed. Instant noodles and traditional Chinese noodles account for around 45% of wheat flour consumption, while baguettes and bread make up around 35%. The remaining 20% is used for other baked and wheat based foods. Rice is the main staple food in Vietnam, with wheat considered second in line.

Australian milling wheat makes up around 70-80% of the wheat imported into Vietnam. As Western food chains in the region continue to grow, the growth in the importation of milling wheat into Vietnam is expected to continue. Over the last few years, there has been a large increase in feed wheat imports, due to the growth of the feed industry coupled with a fall in wheat prices which has made wheat an attractive substitute for corn.

Interflour Vietnam Interflour Vietnam – located in Ba Ria Vung Tau Province, 80 km away from Ho Chi Minh City – has a milling capacity of 1,000 tonnes per day, equivalent to over 250,000 tonnes of flour per year. Interflour has an extensive network of distributors and wholesalers across Vietnam.

Interflour sources around 60% of its wheat from Australia, with much of that sourced from Western Australian growers.

Interflour’s new InterMalt malting facility in Vietnam, due for completion in coming months, will produce 110,000 tonnes of malt annually. InterMalt has been strategically positioned to capitalise on the increasing beer market in Vietnam and will source much of its grain from WA. The Vietnamese consume about 32 litres of beer per person a year, which makes Vietnam the largest beer market in South East Asia and the third largest beer market in Asia, behind China and Japan.

AUTUMN 2017

06 | CBH GROUP

GET FREE ACCESS TO LIVE PRICING WITH DAILYGRAIN Did you know that as a CBH shareholder you get free access to live pricing with a DailyGrain membership?

DailyGrain’s Product Co-ordinator, Lauren Taylor notes that access to live pricing is an important part of managing a farm business today.

“Access to live and accurate pricing is important all year round and particularly at harvest, when most growers will sell the majority of their grain and it is not unusual to see prices fluctuate between ten to fifteen dollars in one day,” Ms Taylor said.

DailyGrain’s Basic Membership provides members with weekly SMS and email price reports for the grades of their choice and access to the DailyGrain website, which provides prices and estimated pool returns (EPRs) for all marketers across all grades and commodities in WA. Users can also request price updates at any time via SMS on Demand, view historical price charts and set up marketing plans.

CBH CONTINUES SUPPORT OF RFDS CBH will continue to partner with the Royal Flying Doctor Service of WA, as a major sponsor of the RFDS Aero Medical Fund.

This follows on from a three year partnership to assist in the evaluation of the safety of 700 airstrips across the state – a program initially chosen to align with CBH’s strong safety focus.

As major sponsor of the RFDS Aero Medical Fund, CBH will provide $750,000 over the next five years to the fund, which supports some of RFDS’ core requirements, including aircraft, infrastructure and technology - all essential components in being able to deliver the best possible aero medical services to Western Australians living in regional areas.

CBH members can opt to upgrade to a full DailyGrain membership at a cost of $350 plus GST to access the additional benefits of daily SMS and email price reports, access to the DailyGrain app, the option to set price targets and receive notification when these are reached, and the ability to link your account to LoadNet. “One of the greatest features of DailyGrain is our link with LoadNet,” Ms Taylor said.

“Through our partnership with CBH, members can link their LoadNet account with their DailyGrain account so that every time they log into DailyGrain, their load information will update from LoadNet. This enables members to manage all their stock from the DailyGrain website and nominate and sell their grain all from the one place.”

For more information on DailyGrain visit www.dailygrain.com.au, email info@dailygrain.com.au or call 9416 6244.

DIRECTOR ELECTION RESULTS IN NO CHANGE TO CBH BOARD The 2017 CBH Group Member Director Elections were held on 20 February 2017, with incumbents Vern Dempster and Rod Madden both re-elected as Member Directors.

In District 1, Rod Madden from Morawa was reelected against Bradley Cripps from Northampton and Gareth Rowe from Geraldton.

In District 2, Vern Dempster from Northam was reelected against Stuart Mussared from Cunderdin.

Lauren Taylor DailyGrain’s Product Co-ordinator

AUTUMN 2017

CBH Chairman, Wally Newman, was re-elected unopposed in District 4 at the close of nominations on 3 January 2017.

CBH GROUP | 07

MAXIMISING YOUR SUPER AFTER A GOOD HARVEST If you’re coming off the back off a good harvest, you might want to look at maximising your superannuation contributions, especially given that the maximum amount you can contribute to your superannuation each year is set to reduce from 1 July 2017.

That’s the suggestion of CBH Super Chief Executive Officer, Donna Adam, who notes that by making extra contributions now, you can still take advantage of the higher limits for this financial year.

“The concessional contributions cap is the maximum amount of before-tax contributions you can make to your superannuation in a financial year,” Ms Adam said.

“These contributions are generally only taxed at 15 percent which may be lower than your personal income tax rate.”

Concessional contributions include: • contributions where an income tax deduction is allowed (e.g. contributions made by self-employed people);

“The non-concessional contributions cap applies to any after-tax contribution you pay into your super, other than if you claim a tax deduction for the contribution, generally if self-employed,” Ms Adam said.

“You may be able to take advantage of making a contribution of up to $540,000 if you are under age 65 if you get in before 1 July 2017. This is using the 3-year bring-forward rule.

“If you are considering making extra contributions to your super, now is a good time to take action.”

For information on how CBH Super can assist with your superannuation needs, contact 9416 6235 or email danielle.purdye@cbh.com.au

• employer contributions (e.g. the 9.5% super guarantee); and • salary sacrificed contributions into super.

2016-17

Concessional contributions cap (Before – tax) Non-concessional contributions cap (After- tax)

2017-18

Age 49+ on June 30 2016

Age >49 on June 30 2016

All ages

$35,000 p.a.

$30,000 p.a.

$25,000

$180,000

$100,000

Disclaimer: This information does not take into account your own situation, so you should consider that before you decide to make any changes to your account.

You should also consider the information in the Product Disclosure Statement available from www.cbhsuper.com.au.

Issued by CBH Superannuation Holdings Pty Ltd ABN: 99 008 684 268 RSE Licence: L0001625 as Trustee of CBH Superannuation Fund ABN: 84 433 159 328 RSE Registration No: R1005165

AUTUMN 2017

Community Corner HOW THE GRASS ROOTS FUND IS HELPING OUR COMMUNITIES The CBH Grass Roots Fund delivered $90,000 to more than 50 organisations last year. In addition, two rounds of small scale infrastructure grants were introduced and provided funding of $300,000 to 52 projects.

One of those recipients was the Cranbrook Primary School who received funds for their School Veggie Patch project.

Through the program, the students learn how to sustainably grow their own food and then prepare and eat the food they’ve produced.

The CBH Grass Roots Fund enabled the school to purchase a 170,000 litre rainwater tank for their school veggie patch.

“To grow good veggies, you need lots of water. Without CBH support, we wouldn’t have the sustainability water that we have on site today” said Peter Slater, volunteer at the Cranbrook Primary School.

You can hear more about this and other CBH Grass Roots Fund projects online at www.cbh.com.au

CBH KICKS OFF ITS FOOTY SPONSORSHIP FOR 2017 With the footy season about to kick off, CBH is pleased to continue its sponsorship of the WA Country Football League for 2017.

Over the past 15 years, CBH has provided more than $660,000 to support 12 leagues across the state, incorporating all leagues in the core grain growing regions of WA. In 2017, CBH will provide $62,500 in support of country football in WA and be a major sponsor or this year’s WA Country Football League finals games.

Visit www.wacfl.com.au for more information and fixtures for the 2017 season.

Please submit your story ideas to: The Editor Corporate Affairs, CBH Group 30 Delhi Street, West Perth WA 6005

T (08) 9237 9580 F (08) 9322 3942 E nicole.penter@cbh.com.au

cbh.com.au

Disclaimer: Articles submitted, information provided and views expressed in this publication are those of the contributing authors and not those of the publishers. No representation is given, assurance made or responsibility taken as to the accuracy, completeness, appropriateness or validity of any information contained in this publication and neither the publishers nor their offices and employees will be liable on any account whatsoever (including negligence, defamation or otherwise for any loss or damage arising as a result of the inclusion of or any reliance on any such information — except in so far as any liability cannot be excluded by law) and both contributors and readers must make and rely wholly on their own enquiries and judgements.