June 30, 2008

Olam taps Australian wheat export opportunities as market deregulates

Singapore-based Olam International Ltd will export wheat, barley and rapeseed through its wholly-owned subsidiary, Queensland Cotton Holdings, starting July 1, a senior company executive said Friday (June 27, 2008).

Olam specializes in the supply chain management of agricultural products. The company's integrated supply chain operates in more than 60 countries and recent Q3 FY2008 profits grew 38.5 percent to S$55.3 million (US$40.59 million).    

Richard Haire, chief executive of Queensland Cotton, said he expects the company, which diversified into the pulses and niche grains market with the acquisition of Mt Tyson Seeds in 2003, to export 150,000-250,000 tonnes of wheat, barley and rapeseed in the 2009 financial year starting July.

"We do want to be a mainstream player so we'll be looking at trading around 1 million tonnes of wheat within the next five years, and some of that will be domestic trade," said Haire.

In other words, Queensland Cotton is aiming to account for close to 10 percent of Australia's export market, estimated at around 12 million tonnes this year, within five years.

Australia's government has passed laws deregulating its bulk wheat export trade from July 1. Queensland Cotton will be applying for an export accreditation under this new export marketing system.

Queensland Cotton has access to around half of Australia's wheat output through the Mt Tyson Seeds network and its footprint in the major grain producing regions in northern New South Wales and southern Queensland.

"We are on the lookout for opportunities to invest capital in very selective supply chain operations, such as a logistics-type facility or some first stage processing facilities...we're certainly looking for those strategic investment opportunities in eastern Australia," said Haire.

Asia and Africa will be the main export destinations for Olam's grain business as it has strong marketing access to these regions, he added.