Photos courtesy of CBH.
As an Essex boy, Crane may not have expected that one day he’d be leading the Western Australian bulk handler and grower cooperative.
The fact he’s in Australia at all, he attributes to his “give-it-a-go” attitude and sense of adventure. It’s this same attitude that saw him load up his motorbike and ride it to Israel to undertake a PhD in cotton crop imagery.
Crane’s first experience in the grains industry was at a U.K. malt business. While there he worked in export sales, a role that provided him the opportunity to travel across Africa, Asia, Central America and South America.
This experience helped guide him in finding opportunities for CBH.
Leaving the U.K. behind for a life in Perth, Crane said his experience in malt and the management of people helped him with this next chapter in his career.
Although his time at the cooperative is coming to an end, Crane spoke with great enthusiasm on the future of the organization, the industry and CBH’s achievements.
Financial strength
As he prepares to hand over the reins to incoming CEO Jimmy Wilson (formerly boss of resource giant BHP Iron Ore), he can be confident that the organization’s financial strength will support its future aspirations. The top-level figures are strong with total revenue in 2016 of A$3.2 billion ($2.57 billion), more than double 2009 figures, almost no long-term debt and A$1.65 billion in total net assets.
In the eight years to 2017, CBH accumulated A$700 million profit, and invested A$1 billion in storage and handling infrastructure, a rail fleet and implemented farm-to-port supply chain efficiencies. Further efficiencies and investment will be made as part of the cooperative’s network strategy and investment.
Grain growers in Western Australia are clearly behind the organization and are confident in the direction it’s headed. The cooperative’s surveys show strong grower satisfaction, particularly in storage and handling.
They have reason to be happy with the financial strength as the benefits flow back to them in terms of investment in storage and handling assets and in the A$175 million paid to them as rebates over the last eight years.
While some may think operating a cooperative in today’s market is outdated and flawed, Crane felt the opposite was true, especially when running critical export infrastructure. He set out early to dispel any myths about cooperatives and instead make it a strength of the organization. One of the first things he did was listen to growers, get their feedback on what was really important to them and put to bed the organization’s structure.
The feedback showed an overwhelming desire to retain the cooperative model. CBH’s purpose was rewritten to one that delivered value to the grower and the cooperative structure was talked about unashamedly.
This singular grower focus, Crane said, also has lifted grower trust. This was highlighted in the 2017 grower survey, when 73% agreed that CBH does the right thing for Western Australian growers.
It was this level of trust and grower focus that allowed Crane and the CBH board to stare down the Australian Grains Champion (AGC) A$1 billion offer to commercialize the cooperative in 2016. Saying growers were better informed about the benefits of the cooperative model, Crane and the board was confident that growers would back the board’s decision to reject the offer.
As a grower cooperative, members could look at how the structure supported the export task faced by the state, as well as its level of investment, and the singular focus on the grower and compare it against other states’ bulk handlers with different business structures.
Crane said Western Australian growers could also see rising storage and handling fees cutting into the margins of east coast and South Australian growers, and compare them against their own lower fees under the cooperative.
Crane noted that CBH storage and handling fees had increased by only 2% (1.2% after rebates) from 2009 to 2017. He attributed this to who owns the assets and what their commercial goals are, highlighting a supply chain savings of A$10 to A$13 per tonne compared to eastern state bulk handlers.
“Cooperatives make good custodians of infrastructure where it’s a means to an end, particularly for growers to be competitive in a global market,” he said. “The purpose of the cooperative is to make the grower more profitable rather than to make more profits.”
Helping to lower supply chain costs is the state’s export focus since 95% of the Western Australia crop is destined for international markets. This sole responsibility, which reduces costs from farm to export, intensified under a cooperative model. When it became clear there was no appetite for change, the AGC withdrew its offer in September 2016.
Investment
Part of Crane’s remit has been to strengthen the organization’s base to create grower returns even in difficult seasons. This has been achieved with the purchase and construction of flour mills and malting operations in Asia, a Turkish mill, the expansion of trading and accumulation with the opening of offices in Russia, the construction of a Western Australian oat processing facility and the divestment of poorly performing assets. The result is net asset growth of 69% since 2008.
Aside from investment in new assets, it also was important for the organization to keep existing assets operating efficiently. To that end, Crane has led a review that has resulted in a 10-year network strategy that will commit CBH to A$750 million investment over the next five years in 100 sites, with the remaining progressively closed.
This optimization of sites has to be done in a way that doesn’t make the grower worse off. To that end, the cooperative measures efficiency from farm to port rather than site to port. By adopting this approach, CBH avoids shifting the cost of the transport task to the farmer by making them travel further to deliver grain into the silo.
To understand this in detail, the cooperative spent time analyzing extensive data from previous seasons to understand the flow of grain from farms into the CBH storage network.
“We’ve done extensive modelling to identify the 100 sites that will bring in the same, if not more, volume,” Crane said.
Once implemented, the network strategy is expected to reduce operational costs that will be returned to the grower through lower fees. It also will ensure the system can maintain and expand volumes to continue to meet the needs of Western Australian growers.
With an efficient network, Crane believes the next opportunity for growers is the use of big data in the supply chain. This is particularly the case for customers who want Australian product and expect traceability.
“Understanding if there is a premium for a grain of a particular quality and provenance is an opportunity, but we have to prove it from the farm right through to the consumer,” he said. “Bringing the traceability to the supply chain is particularly valuable for Australia.”
Traceability in the livestock industry, and in particular electronic tags, has been in existence since 1999, but as yet it has been challenging for the grains industry. The use of new data capture, recording innovations such as Blockchain will help in tracing the movement of grain from farm to ship.
“Using our immense history of grower delivery data and annual grower estimates, we can add machine learning technology to better predict crop quality and manage the supply chain even better,” Crane said.
Improving safety
Among Crane’s proudest achievements at CBH is the improvement in safety. One of his first actions after being appointed CEO, and knowing that change is best led by an organization’s leadership, Crane fixed a sign to his desk that read “Safety Starts Here.”
In 2009, CBH’s All Injury Frequency Rate (AIFR) was 38; now it is 11 and falling. AIFR is calculated as the number of injuries per million hours worked, and includes lost time injuries, medical treatment injuries and restricted work injuries for permanent and casual employees, and CBH controlled contractors.
“Our people are our most important asset and we needed to focus more on their safety,” Crane said. “We started by focusing on the small things, get the small things right and the big things come.”
While seeking to establish a board career once he finishes with CBH on Nov. 30, Crane will spend the next few months handing over long-established customer relationships to Wilson and provide advice on the cooperative’s current business strategy.
