June 24, 2008

With deregulation, CBH eyes exports to mills in Asia

Western Australian grower-owned grain company Cooperative Bulk Handling Ltd. late Monday said deregulation of bulk wheat exports will allow it to supply direct to its flour mills in Asia.

Chief Executive Imre Mencshelyi said the new export arrangements, which will come into force July 1 will allow accredited exporters to freely export bulk wheat for the first time since 1939.

"These changes will bring a wider range of marketing options to Western Australian wheat growers who rely on the export market for the majority of their income," he said in a statement.

Meanwhile, Mark Irwin, managing director of GrainCorp Ltd. (GNC.AU), said in a statement issued late Monday. "Greater competition for the purchase of wheat from growers will stimulate the development of new products and services, as new exporters compete to buy wheat from growers."

GrainCorp will seek accreditation as a bulk exporter and offer its services, including eastern Australia's largest upcountry storage network, trains and nine coastal export terminals to other exporters, he said.

After a good growing season, Western Australia can produce 10 percent of globally traded wheat, significantly affecting world prices.

CBH has a joint venture Pacific Agrifoods with Indonesia's Salim Group to buy five flour mills in Indonesia and Malaysia and a grain terminal and flour mill in Vietnam.

CBH was previously not allowed to supply its own flour mills, having to deliver first to a collective export sale pool operated by AWB Ltd. (AWB.AU), then buy it back later, though in recent years under a permit system, CBH was permitted to supply direct to meet some of its flour mill demand.

CBH operates about 200 grain receival and storage sites through the Western Australian wheat belt and owns and operates the state's four coastal export terminals.