ACKNOWLEDGING the need to continually innovate in order to attract custom from growers in the deregulated market, CBH Grain has announced it will make a nationwide loyalty payment for all old crop deliveries.
CBH Grain general manager Brian Mumme said the company decided to make the payment in order to differentiate itself from its opposition.
"We had a pretty good season as far as taking grain goes, across both the cash and pool sectors and taking a lot of grain has allowed us to reduce to the supply chain and overhead costs," Mr Mumme said.
"The payment comes in response to feedback from growers about how we could reward their loyalty."
At this stage, eligible growers can expect a payment of between $2.50 a tonne and $2.95/t delivered to CBH, across all commodities and paygrades delivered before March 31.
Mr Mumme said the company intended to make the loyalty payments an ongoing feature of dealing with CBH.
"We want to make this payment a yearly feature, of course it will depend on the financial point of view, given that we need to be initially conservative given things such as the potential for a small crop or a small market share," he said.
"It is largely dependent on the volumes we receive."
Mr Mumme said the payments were not designed to allow CBH to post lower upfront prices.
"We know that people like dealing with CBH Grain as it is reliable, but the prices must remain competitive for us to retain market share," he said.
"These payments won't excuse poor prices, we are just trying to reward our customers for their loyalty."
The model of the loyalty payment was decided after research found farmers did not like the idea of being tied into deliveries over several seasons to get a payment.
"We wanted to keep it simple, and we heard that people didn't like being tied in over more than one season, but we will continue to monitor the best way to make incentive payments such as this," Mr Mumme said.
He said the company was pleased with the way it handled the first year of open wheat exporting, especially given the added hurdles of a weather interrupted harvest in CBH Grain's home state of WA and the global financial crisis. It saw big opportunities in expansion on the east coast and attracting new export customers.
"We've got a relatively minor share of the east coast market and we're looking to increase that," Mr Mumme said.
"We are also looking at getting more export market opportunities - our coarse grain exporting program, together with experience exporting wheat under licence has prepared us to quickly capture export opportunities."
There would be some exclusions to the payment.
Track trades and deliveries to non-Grain Pool retail pools would be excluded from the payment, including deliveries into Plum Grove's Harvest Pool.
CBH Grain's accumulation arm Grain Pool attracted a whopping 50 per cent of all the grain delivered to CBH bins in WA last season out of a 12.3mt crop.
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