ROSEWORTHY, South Australia — An official with Swiss commodities trader Glencore International offered few details last week on how a $6.1 billion takeover of Viterra will affect grain growers in Australia.
Andrew Wilsdon, manager of Glencore Grain’s South Australian operations, told farmers it is still too early to speculate on how Viterra’s Australian grain operations will be affected.
However, he said Glencore will focus its Australian business on operations related to grain origination, bulk handling and exports.
“We don’t have a lot of detail right now on what the (deal) means as far as on-the-ground operations,” Wilsdon said last week at a grain industry meeting near Roseworthy.
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“But our main focus will obviously be on grain origination.”
The Glencore-Viterra deal is valued at $6.1 billion, but Wilsdon said Glencore’s investment will be closer to $3.5 billion once the company divests itself of “non-core assets.”
In Australia, the deal will combine two of the country’s biggest wheat export companies.
Although it owns few physical assets in Australia, Glencore has been exporting five million tonnes of grain and oilseeds a year out of the country for several years.
It controls 16 percent of Australia’s wheat exports, 20 percent of barley and 32 percent of canola exports.
The company also owns or farms 200,000 acres of farmland in Australia, primarily in the eastern state of New South Wales.
The acquisition of Viterra’s assets will fortify Glencore’s share of the Australian grain trade and give the company control of key supply chain assets in the state of South Australia.
Viterra is easily the biggest grain handler in South Australia.
Andrew Hannon, country operations manger for Viterra, said the company owns more than 100 grain receival sites in South Australia and two large bulk storage facilities in the neighbouring state of Victoria.
Total country storage under Viterra’s control is estimated at 10.4 million tonnes.
Viterra also owns all seven bulk export terminals in South Australia and handles 90 percent of the grain that goes into the state’s bulk handling system.
It also owns six packing and processing facilities in Victoria, New South Wales and South Australia and has malting operations throughout the country.
The company’s Australian assets also include 15 to 20 farm input retail operations, which are not considered core assets under Glencore’s current operating model.
Hannon said Viterra has been modernizing its country infrastructure over the past three years and has added more than a million tonnes of country storage capacity.
“Effectively, during harvest, we would have somewhere between 250,000 and 300,000 transactions … and each one of those transactions (would represent) an average of 25,000 tonnes of grain,” Hannon said.
“Last year, we took 6.7 million tonnes of grain into the system at our up-country and port facilities during harvest.”
Deane Crabb, policy manager with the South Australian Farmers Federation, said the Glencore takeover will likely evoke a mixed reaction from the state’s grain farmers.
Even with the loss of Viterra, close to a dozen active exporters will still be operating in the state.
Viterra did not have great reputation with some of the state’s grain producers, he added.
After the company acquired the assets of ABB — formerly the Australian Barley Board — in 2009, many growers complained of discriminatory pricing policies, inadequate grain testing procedures, irregular business hours and long lineups at Viterra delivery points.
To address those concerns, the company reviewed it operational procedures at up-country facilities and implemented changes aimed at improving farmer relations.
A statement distributed by Glencore Grain last week suggested it will continue to offer other Australian exporters access to Glencore-Viterra facilities, including country storage sites and export terminals.
