SPECULATION that GrainCorp wants to merge operations with Cooperative Bulk Handling has mounted following its lease of office space at Metro Grain Centre
It is a rumour which both companies have hotly denied, with GrainCorp managing director Tom Keene saying the move west was simply strategic for the business, however, he conceded GrainCorp was cementing connections with CBH on a commercial basis.
"We are looking at joint investment in business opportunities with CBH," he said.
As an example, Mr Keene referred to GrainCorp's drive to continue expanding into grain handling and storage infrastructure equipment, in which CBH is involved (in part) through its soon-to-be-released subsidiary Bulkwest.
He said GrainCorp made the move to WA to capitalise on Australia's largest grain-growing state after identifying tremendous business growth potential.
In what appears to be a bid to strengthen its already good relationship with CBH and to lay the foundations for arbitrage in its domestic trading in WA, GrainCorp jumped at CBH's public offer of office space at Metro Grain Centre ‹ an offer, GrainCorp says, that it was the only one to take up.
As a consequence, GrainCorp sent grain merchant Russell French to WA in March this year.
While GrainCorp is not pursuing a more formal relationship with CBH beyond business partnerships at the moment, when asked if GrainCorp would pursue a merger if the statutory grain marketing arrangements were repealed, Mr Keene refused to speculate about the future of CBH or GrainCorp.
Repeating the statement he made at the annual general meeting of the WA division of the Australian Grains Institute last month, he said CBH's structure was "limiting its ability to expand into marketing".
Although CBH is already a major player in grain handling infrastructure manufacturing and shares ownership in Nugrain, it too believes it could not survive on storage and handling alone.
Although GrainCorp's strategic investment and infiltration into WA's grain industry has been somewhat stealth-like, by next year its presence in WA will be more apparent, as Mr Keene has revealed plans to take on the agribusiness service centre heavyweights.
During the next 12 months, GrainCorp will introduce the farm services it offers Eastern States farmers to WA, but only in strategic locations which have not yet been revealed.
These will include services from farm inputs to shipping, such as merchandise, finance, plant testing, biotechnology, e-commerce and infrastructure manufacturing, some of which CBH will be involved in.
However, for this harvest, GrainCorp is lying low, only pursuing WA's wheat and canola, and some lupins and chick peas through selected agribusiness consultants and large farmers.
At this stage the grain required for domestic trading and minimal exports (DCT) will only be accepted at four CBH sites across WA, including Merredin, Southern Cross, Bruce Rock and the Metro Grain Centre.
Also rejecting the rumour of a merger was CBH general manger Imre Mencshelyi, who said the link with GrainCorp was only a business relationship in machinery and infrastructure and through Nugrain.
Nugrain also involves Ausbulk, Wesfarmers Landmark, Nufarm and GrainCorp.
Mr Mencshelyi said any development in their relationship would only add to what they were already doing.
He did not rule out pursuing other commercial ventures with GrainCorp through Bulkwest Pty Ltd, which will be officially launched today.