Bunge's southern port plans

22 Aug, 2014 02:00 AM
Comments
32
 
We know we have issues with our rail network and we also need investment in road freight

FRESH from setting up a new bulk grain port terminal in Bunbury, Western Australia, Bunge Australia has announced plans for a 450,000 tonne a year export facility in Geelong, Victoria.

Similar to its Bunbury plan, it will utilise existing infrastructure in its construction. It will be situated on a site owned by woodchip exporter Midway and will use a woodchip loader on the site that is currently not operating at capacity.

The Bunge site will be situated at Corio Quay North, near GrainCorp's Geelong site, the largest exporter of grain in Victoria. It will be a road-only site.

Bunge Australia general manager Chris Aucote said the decision making process in focusing on Geelong was similar to the reason the company had decided to set up at Bunbury.

"Like Bunbury, we decided on Geelong due to the capabilities of its port, complementary infrastructure and good transport access for grain supply."

He said with Geelong's status as a port hub for all commodities, a road-only site would be able to attract trucks with good back-loading possibilities for commodities such as fertiliser to go back upcountry.

Mr Aucote said the aim was to develop a low-cost and efficient site that would provide solid competition for grain from across south-eastern Australia.

"The new terminal is intended to assist Bunge to offer better prices to grain growers and better service to customers," Mr Aucote said.

He said the growing amount of independent bulk handlers and large on-farm storages throughout Victoria would provide a good accumulation network.

"On-farm storage is only going to get bigger, so we are not just focusing on sourcing grain from the large rail sites, and that will be one of our points of difference."

At present, Mr Aucote said the idea was most likely to focus on Bunge exports alone, but he said this could not be confirmed until more is known about Government policy on port access.

"We have to see whether there is a mandatory code of conduct for port operators, whether it will apply to smaller ports, itís really too early to say much on that front."

Bunge has applied to the City of Greater Geelong for planning permission to construct a grain receival facility and three storage silos that will connect to the current woodchip loader.

"We have had very good co-operation from Midway and Geelong Port, highlighting this projectís great advantage of utilising infrastructure that is already available, so we see this investment as being strongly positive," Mr Aucote said.

Victorian Farmers Federation (VFF) grains group president Brett Hosking said he was excited by the news.

"It's a good thing, we always like to see new investment, it is a sign that other people see a positive outlook for Victorian agriculture."

Mr Hosking said the port would provide good competition for growers, but added GrainCorp still had a very strong market position.

"Bunge has identified an opportunity within the market, but GrainCorp is still the major player."

Mr Aucote agreed, saying Bunge did not see the new facility as going head to head with the nearby GrainCorp site.

"As you can see from the tonnages, we will be a lot smaller, and the focus will be different as a road-only site."

Mr Hosking said he hoped the Bunge announcement would be complemented by investment in other links in the supply chain.

"We know we have issues with our rail network and we also need investment in road freight, the current State Government is promising upgrades for rail which would be most welcome, as we need the entire supply chain from paddock to port to run smoothly."

It is believed the development of the port will cost around $15-20 million.

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FarmOnline
Gregor Heard

Gregor Heard

is the national grains writer for Fairfax Agricultural Media
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READER COMMENTS

GFA
22/08/2014 5:56:14 AM

It is clear that the revenue to build new port structures will be coming out of farmers pockets as they remain divided and too gung ho to see how they are being ripped off by their own lack of unity. Numbers have gone down by about half from 50,000 to 25,000 since the AWB was hamstrung in the 90's and then dismantled. Will grain farmers wake up and understand that farm gate profitability is gone when the remaining 25,000 is halved again in another 5-10 years?
LT
22/08/2014 6:40:52 AM

Bunge are not mugs. They are only building ports in Australia because they know there is money to be made out of Australian farmers. They have obviously taken such good profits out of the growers in WA around Bunbury, that they now see how easy it would be to do the same in Geelong. Clearly Bunge are able to get a lot more money out of the grain they are buying in Australia than they are paying growers. Hence the expansion.
Jock Munro
22/08/2014 6:49:06 AM

How can Bunge the merchant middleman offer growers better prices, when in fact he is sourcing grain for his end user clients at the cheapest possible price?!
Deregul8
22/08/2014 7:57:01 AM

Deregulate and they will come. Unfortunately it takes time but eventually the infrastructure gets built and the winners are growers. the single biggest favour you can do as a grain farmer is look to where those infrastructure dollars will be spent and aim to get your production base to the catchments that will benefit most, eg Kwinana zone in WA. That is where land prices will be most strongly supported whilst those areas that were propped by regulation, co-ops and cross subsidisation will lose value.
Consolidated
22/08/2014 10:24:57 AM

despite the dribble here i gladly sold half my wheat to bunge last year and banked $10 a tonne more than the stuff i pushed through cbh. couldnt store it all unfortunately. needless to say i am building more silos at the moment.
Dalby
22/08/2014 11:46:14 AM

Yes GFA, you make a good point. Up until the late 90's there was enough profit in grain farming in Australia to support profits for 50,000 grain growers. Today however, only 25,000 families, producing the same volume of grain, are struggling to survive financially. That means at least half of the farm gate profits have gone out of grain production in Australia, in over 10 years. Most of that time has been without the wheat single desk system. Most of it has also coincided with much higher global demand and prices for our wheat. Must be doing something very wrong to give away all that money.
John from Tamworth
22/08/2014 2:36:04 PM

Only in the weird world of the NSW grain belt is investment in new grain export capacity considered a bad thing.Everywhere else it is regarded as a vote of confidence in the future.
Jock Munro
22/08/2014 3:02:09 PM

Consolidated, I would suggest that the extra $10.00 is an attempt to buy you off- Ask growers in the East what they think of on farm storage-most people over here are going for the cash. You don't realise how lucky you are having CBH.
LC
22/08/2014 3:09:14 PM

I am a Victorian John from Tamworth and I will not knock back Bunge's new Geelong export silo. You have to admit though, that Bunge must obviously be making a handsome profit out of its WA Terminal to go again elsewhere. It will lay idle existing infrastructure. It is all symptomatic of extravagance which will come out of farmers' incomes. I think Dalby summed it up pretty well. We have already seen our margins eaten away by excessive profits of middlemen in the supply chain and grain trade. We now have no bargaining power at all. We get picked off at will in the market place.
Geronimo
22/08/2014 4:25:12 PM

No surprises. It's the same model used overseas long enough for Australian growers to see the writing on the wall here. They invest in a belt over the water. Grower pays to get it there. Want your grain stored up-country? Do it yourself and we'll call it in when we need it. Oh and by the way, now that you are a third-origin trade to the rest of our global book, there may be a year when we don't want your grain at all and it sits there for 12 months. That's why we didn't want to pay more than the belt over the water.
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