AWB and CBH today announced a five-year joint venture to unify their grain logistics in Western Australia with an agreement to establish a jointly owned company.
AWB Chairman Brendan Stewart and CBH Chairman Allan Watson said that the establishment of the Western Australian company Grain Direct follows extensive negotiations and detailed work by a joint working group established by both companies in February 2003.
“The Boards of AWB and CBH have given their approval to the joint venture, and our companies will now commence a detailed phase of consultation to seek approval from relevant government agencies and regulatory bodies, including the Australian Competition and Consumer Commission,” they said.
The Chairmen emphasised that the establishment of Grain Direct was subject to ACCC approval.
“The key objective and business activities of Grain Direct will centre on reducing grain logistics costs for AWB and Grain Pool in WA for the benefit of all grain growers and the broader agricultural industry,” they said.
“The business activities of Grain Direct will include the management of grain logistics in WA for AWB, negotiation of contracts with logistic service providers and monitoring the performance of those contracts for AWB.”
“Grain Direct will in turn sub-contract to CBH the day-to-day grain logistic management in Western Australia.
“These activities will deliver savings to WA growers through lower deductions for growers’ grain payments by AWB and Grain Pool.
“Our clear and mutual aim in this partnership is to deliver real value for Western Australian growers with net savings in storage, handling and freight costs.”
Savings will be in the order of $35 million per annum by the 2008/09 season; growers can expect to see a net reduction in charges of $3.30 per tonne. The savings will be phased in over 5 years.
The JV will see no change to the co-operative structure of CBH and there will be no transfer of ownership of CBH’s assets.
The Grain Direct agreements contain rigorous performance criteria. The aim is to have Grain Direct fully operational by 1 October 2004.