Growth curve for harvest and trade

The state’s grain growers have reaped a bountiful harvest during the past two seasons.

This year’s record 26 million tonnes added to a bumper 2021-22 crop, which came in at 24mt for all receivals.

As the biggest grain exporter in Western Australia, CBH Group receives about 90 per cent of the state’s grain harvest, setting the company’s grain receival record at 22.7mt for 2022-23 (of the 26mt total state wide).

CBH chief operations officer Mick Daw said the season looked promising from as early as April last year, with the Grains Industry Association of Western Australia increasing its predictions in the monthly crop reports.

“Yields were expected to be high, and this was quickly confirmed as harvest progressed,” Mr Daw told Business News.

“Most growers ended up with exceptional yields, although harvest was not without its challenges in some areas with the ongoing wet weather.

“Deliveries are still trickling in from some growers, particularly in the southern parts of the state, so we expect total receivals for the season to be slightly higher.”

A month after the record crop announcement, CBH opened its third fertiliser storage facility in WA, located beside the company’s pre-existing Kwinana Grain Terminal.

The agribusiness giant has been importing granular fertiliser for WA growers since 2015 and has fertiliser operations in Geraldton and Esperance.

The new warehouse can hold 55,000 tonnes of granular fertiliser.

The investment also marks CBH’s entry into the liquid fertiliser market with tanks capable of holding 32,000t of liquid.

Speaking at the launch of the new CBH facility, Agriculture and Food Minister Jackie Jarvis said the fertiliser project was an example of the cooperative’s ongoing investment in the grain supply chain.

“This venture will ensure that growers have easy access to fertiliser as one of their key raw inputs,” she said.

“It will enable CBH to expand its global granular fertiliser offering, provide consistency to growers and enable CBH to enter the liquid fertiliser market for the first time.”

CBH plans to strengthen international trade, with particular focus on the Asian market, during the next 12 months.

The cooperative’s first bulk exports of wheat were in 2007, with more than 200 customers in 30 countries now on the books.

CBH Marketing and Trading buys and sells about 50 per cent of WA’s crop to international customers, exporting a broad spectrum of grains including wheat, oats, canola and barley.

Resources Minister Madeleine King said CBH’s international grain trade supported Asian markets, while simultaneously ensuring WA’s food security. 

“The importance of what CBH does for our regional food security cannot be underestimated especially the grain that goes to Indonesia and Japan,” she said.

CBH chief marketing and trading officer Jason Craig said about 85 per cent of WA grain was exported, with more than half of this sold into Asia.

“It’s basically our domestic market,” he said.

“From South-East Asia through to Japan, China and [South] Korea, we deal with flour millers, feed millers and even some maltsters including in Vietnam where InterMalt, one of our joint ventures, has a malting plant.”

CBH will be further expanding agricultural trade in South-East Asia as the market in this region becomes more affluent.

Mr Craig said CBH is also driven by WA’s competitive advantage from a freight perspective.

“From WA to Indonesia, for example, is only a seven-day sailing so it’s a very short distance and Indonesia is one of our largest wheat markets,” he said.

“Without doubt, South-East Asia is very important to us.

“A big part of our expansion has been into the Philippines for feed wheat and feed barley; similarly in Vietnam, we’ve sold a lot of feed wheat, feed barley and milling wheat as well.”

RLF AgTech is another WA-based agribusiness working to strengthen ties to affluent Asian markets.

“Asia represents two thirds of the world’s food requirements,” RLF chief executive Ken Hancock told Business News.

“We’re well placed here in Australia to take advantage of that and that’s why we’ve been very focused on developing business in Asia.”

For CBH and other exporters, opportunities in Asia were welcome in light of the ongoing uncertainty resulting from Russia’s war in Ukraine, according to Mr Craig.

“Russia is the biggest wheat exporter in the world and Ukraine is within the top five,” he said.

“We’re at different ends of the season, so WA growers enjoy a better price at a certain time of the year, normally the first half.

“In the past, when the Russians and Ukrainians start bringing on their new crop, it would influence WA growers’ pricing, but the war has caused a more significant impact.”

Russia’s invasion of Ukraine in February 2022 disrupted grain exports as Russian military vessels blocked the Ukrainian ports in the Black Sea.

Food prices peaked in March last year, with both countries being large exporters of wheat and barley.

To tackle the global food security crisis, the United Nations and Turkey brokered an agreement with Russia in July to open a corridor in the Black Sea for Ukraine to continue its exports.

In early April this year, the UN recorded more than 26.8mt of product had been exported from Ukraine through the Black Sea Grain Initiative.

Wheat exports made up 30 per cent of this figure. The initiative, which had been due to expire March 18, was extended for four months.

“The geopolitical factors are going to be really important as we move forward here at CBH because what happens in Russia and Ukraine will dictate how the markets will turn very quickly,” Mr Craig said.