June 19, 2008

  

 

Australian agribusiness AWB Ltd. wants to use its expertise in trading agricultural products and the farm sector generally to grow a business in Brazil, including in grains, oilseeds, pulses, cattle and feedlots, a spokesman said Thursday (June 19, 2008).

 

After establishing in what is becoming the global agricultural powerhouse in 2005, Australia's largest agribusiness already has five offices, including a head office in Sao Paulo, four warehouses and a rail loading facility and wants to broaden and deepen its reach.

 

Echoing comments made Thursday by Managing Director Gordon Davis to a JPMorgan agricultural corporate briefing, the spokesman said AWB sees "huge potential" in Brazil for production and export growth in the farm sector.

 

Brazil already is a major global supplier of soy, coffee, sugar, citrus and beef cattle and AWB plans to use it as a source of these products and grains, oilseeds and pulses to export to Europe using its expertise as a ship charterer and as a global trader through its Geneva office and Melbourne.

 

The company does not plan to have a heavy asset base in Brazil so much as strategic assets and may look in the future at funding production, he said.

 

Aside from an extensive commodity trading business in Australia, AWB operates a rural merchandise and services unit called Landmark with more than 400 outlets and an agricultural financial services business, including harvest loans.

 

Its expansion offshore in recent years comes as its Australian wheat export trade - the foundation of its business - is set to contract with market liberalization. 

 

Under a new law, the sector's regulator Wheat Exports Australia will accredit multiple exporters, ending AWB's monopoly in Australia's wheat exports.

 

Still, AWB remains a force to be reckoned with and plans to maintain a major presence in Australian wheat exports, using its expertise in collective export sales or pooling.

 

"Research is continuing to show that farmers like pooling" as a method of selling their wheat, the spokesman said.

 

At least 10 or possibly more businesses are likely to seek accreditation as bulk wheat exporters after July 1, including major global farm trading concerns.

 

These could include A.C. Toepfer International (Australia) Pty Ltd., Bunge Global Markets Australia Pty Ltd., Cargill Australia Ltd., Glencore Grain Pty Ltd., Louis Dreyfus Australia Pty Ltd., GrainCorp Ltd., ABB Grain Ltd. and Cooperative Bulk Handling Ltd.