Viterra to acquire assets from Cargill

Viterra has agreed with Cargill to acquire five storage and handling sites and a mobile ship loader in South Australia and western Victoria. These are the GrainFlow sites at Maitland, Crystal Brook, Mallala, Pinnaroo, and Dimboola, as well as the mobile ship loader at Port Adelaide.

The transaction will require approval by the Australian Competition and Consumer Commission (ACCC) and the Foreign Investment Review Board (FIRB).

Due to the regulatory timing, Cargill will be operating these sites for the 2024 – 2025 harvest.

Viterra Chief Executive Officer ANZ, Philip Hughes says Viterra’s ability to maximise the capabilities of the GrainFlow sites will allow the company to provide customers economic benefits with reduced costs and increased ability to attract higher prices.

“By using the sites’ high-speed rail and truck loading facilities to complement our existing network, we will bring more tonnes to the port through the most efficient and cost-effective route. 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,” Philip says. “Growers will also see a direct benefit with reduced freight rates due to the efficiencies we will gain.”

According to Viterra, bringing the sites into the company’s network will result in reduced freight rates by 15% at Mallala, Crystal Brook and Pinnaroo and 25% at Dimboola and Maitland and provide opportunities for freight efficiency gains across other Central and Eastern region rail sites, with Viterra passing savings to growers.

Viterra will integrate the GrainFlow sites into its network and has plans to make significant initial and ongoing investments to optimise its potential.

“We will be investing approximately AU$ 25m into these sites in the first two years and will continue investing AU$ 8m annually to support efficient outturns and improve delivery times and the grower experience more broadly where required. This is in addition to the AU$ 75m we currently invest in our network each year,” Philip adds.

Philip says the acquisition is an important step in Viterra’s focus on making the South Australian grain supply chain more efficient to compete with interstate and international origins of the Black Sea, Canada, the US and South America and attract more buyers to purchase from the state: “This will further enhance the level of service for buyers accessing the South Australian grain supply chain which supports Viterra’s focus on increasing competition for South Australian and western Victorian growers’ grain. 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.”

Cargill Australia Managing Director, Zsolt Kocza says Cargill is committed to growing its business in South Australia and across Australia more generally: “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,” Zsolt says. “We are excited to build on this growth in the future and continue demonstrating our commitment to the Australian grains industry.”

Additionally, Cargill will invest AU$ 100m to upgrade its crush facilities in New South Wales and Victoria, explore a proposed crush facility in Western Australia to service the APAC oil and meal market and the emerging biofuel sector and launch a new sustainable product for Australian farmers, Cargill SustainConnect, paying canola growers for sustainable agricultural practices.