Viterra and Cargill have confirmed an agreement which will see the former acquire five storage and handling sites plus a mobile shiploader.
The sites include the GrainFlow sites at Maitland, Crystal Brook, Mallala, Pinnaroo, and Dimboola as well as the mobile shiploader in Port Adelaide.
Philip Hughes, chief executive officer for Viterra in Australia and New Zealand, said the company was confident it could maximise the capabilities of the GrainFlow sites.
“By using the sites’ high-speed rail and truck loading facilities to complement our existing network, we will bring more tonnes to port through the most efficient and cost-effective route,” he said.
“This increase in supply chain velocity will enable us to meet the rising demand for high-quality local grain in the first half of the year, assisting growers to achieve a premium for their grain by exporting more tonnes earlier in the season.
“Growers will also see a direct benefit with reduced freight rates due to the efficiencies we will gain.”
According to Viterra, integrating the sites into its network will result in reduced freight. As per its release, the company expects this to be by 15 per cent at Mallala, Crystal Brook and Pinnaroo and 25 per cent at Dimboola and Maitland.
Cargill has confirmed, due to the regulatory timing, it will continue to operate these sites for the 2024-25 harvest season.
Following the acquisition, Viterra also confirmed it will make substantial investments in the sites. In announcing the acquisition, the company said it would invest an initial $25 million in the first two years before continuing with $8 million annually to support outturns and improve delivery times. The investment in these sites is on top of the $75 million Viterra invests in its network each year.
“This will further enhance the level of service for buyers accessing the South Australian grain supply chain which supports Viterra’s focus of increasing competition for South Australian and western Victorian growers’ grain,” Hughes said.
“In the past five years the number of exporters purchasing from our network has doubled, with 24 exporters using Viterra’s network, which has directly benefitted growers.
“We look forward to growing our relationship with Cargill, who will continue to be one of the 24 exporters purchasing grain through the Viterra network, and seeing them increase their volumes as a key exporter from South Australia.”
Zsolt Kocza, managing director of Cargill Australia added: “We have a long term access agreement to Viterra’s export supply chain, supporting our long-term growth plans. In the next few years we intend to double our export volumes and become one of the largest exporters from the state. This means buying more grain from growers to the benefit of growers and the industry overall.
“We are excited to build on this growth in the future and continue demonstrating our commitment to the Australian grains industry.”
The transaction is subject to the approval of the Australian Competition and Consumer Commission and the Foreign Investment Review Board.
In other news, Cargill has confirmed an investment of $100m to upgrade to its crush facilities in New South Wales and Victoria while it is exploring the possibility of a crush facility in Western Australia.
