THE CBH Group's 2004/05 Interflour investment to diversify its income streams and protect revenue in years of poor crop production in WA, was showcased to nine WA wheat growers last week.
Farmers Jim Heal, Three Springs, Gary Manning, Yerecoin, Mick Caughey, Merredin, Anthony Smith, Bremer Bay, Tim Bock, Jerramungup, Lindsay Tuckwell, Kondinin, Neville McDonald, Esperance and Brad Collins, Morawa, joined CBH grower director Brian McAlpine, Maya, CBH's South East Asia regional marketing manager Leith Teakle, head of accumulations Richard Simonaitis, general manager of legal and risk David Woolfe, Area 10 manager Claire Fitzpatrick, marketing and communications adviser Brianna Peake and Kwinana port manager Luke Capewell on a 10-day tour of Malaysia, Indonesia and Singapore.
The tour aimed to link growers to customers, increase the understanding of the South East Asian grain market and the quality requirements of CBH Grain's customers here, provide an understanding of the flour milling process and quality requirements needed to maximise performance, foster links between grain growers and end-use customers and strengthen relationships between the CBH Group, growers, WA rural media and wheat customers.
So far the group has toured Interflour's Research and Development Centre in Selangor, Malaysia, Malayan's flour mill, feed mill and integrated poultry farm in Lumut, Malaysia, Interflour's Prestasi's flour mill at Port Klang in Kuala Lumpur, Malaysia, the High 5 Bread Museum in Shah Alam, Malaysia, traditional bakeries, wet markets and Indofood Manufacturing Company facilities like the Bogasari flour mill and Indofood instant noodle factory in Indonesia.
Bolstered by consumer trends, South East Asia has long been touted as the WA agricultural industry's largest export opportunity.
Former CBH South East Asia technical expert and Interflour executive Dr Nazir Azudin told the tour group improved economic status, changing eating habits, an increase in western style food purchases, the growth of well travelled consumer numbers, better information, health consciousness, internet marketing and the South East Asian culture of eating out, had only contributed to the need for more grain in countries like Malaysia, Indonesia and Singapore.
"The growth of cake, pastry and biscuit franchises in these countries has been incredible," he said.
So how does Australian wheat fit?
Dr Nazir pointed to WA's geographical advantage and said the quick delivery time of sea cargoes to the region put CBH in good stead to make the most of every export opportunity.
"The Australian industry has a good reputation for quality," Dr Nazir said.
"And it goes a long way in maintaining customer confidence.
"Australian wheat is white and bright with good extraction characteristics.
"If you jeopardise or lose these markets you lose everything."
It was a timely message for CBH and the tour group growers after it was revealed at last week's CBH annual general meeting that Interflour delivered declined profit figures in the last financial year.
It posted a $14 million profit from its South East Asian mills of which $7m was attributable to CBH.
CBH has a 50 per cent interest in Interflour which operates six flour mills and one port facility in the region.
The investment was made to better understand downstream market dynamics and customer requirements, leverage CBH's untapped balance sheet to derive value for growers by way of investment returns and gain exposure to the world's fastest growing market for grains.
But it was challenging for the co-operative in 2012 as Interflour experienced intense competition throughout all markets brought about by increases in milling capacity throughout the South East Asian region.
Interflour also faced sharp increases in wheat prices from late June, which peaked in early July and saw increases of up to 40 per cent and an overall flour price impacted profits throughout the last quarter.
But the company's ability to defend its market share also saw 2012 sales volume increase by 13.4pc to 981,000 tonnes of flour after the company's Indonesian flour mill operated at 94pc capacity and the Malaysian mills at 85pc throughout the year.
Every year more than 1.5 million tonnes of wheat is milled in the company's six Indonesian, Malaysian and Vietnamese mills.
p Bobbie Hinkley travelled to Indonesia and Malaysia courtesy of CBH Group.
