Ground Cover Supplement : GC Supplement - Value Chain
GROUND COVER VALUE CHAIN 2 The vertical climb by corporates AUSTRALIAN AGRIBUSINESS IS SPREADING ALONG THE VALUE CHAIN TO INCREASE ITS GLOBAL PRESENCE, WRITES TONY KAYE AUSTRALIA'S MAJOR GRAINS industry players are taking increasingly active steps to move further along the value chain, to broaden their operations and gain a more competitive foothold both at home and in overseas markets. Companies such as ABB Grain, GrainCorp, AWB Ltd and Western Australia's CBH Group no longer want, or can afford, to simply be bulk commodity handlers marketing and delivering grain. Their strate- gic business plans are now focused on investments in value-adding activities and infrastructure, to tap new customer bases. The upshot has been a spate of rationalisations as larger companies have soaked up other companies and assets that can be used for the greater game plans they have mapped out. GrainCorp's managing director, Tom Keene, says the industry generally is moving to become more vertically integrated by investing in other parts of the supply and value chains. "A lot of industry participants were horizontally structured, as they were surrounded by regulation or legislation and were state-based or federally-based com- panies," he says. "Consequently, as they have become corporatised and privatised, we've seen companies such as GrainCorp develop a strategy of investing in the value chain both up and down from its original core business." Reflecting this, GrainCorp now holds a 60 percent stake in Allied Mills, the largest flour miller for human consumption purposes in Australia. The other 40 per- cent is owned by Cargill Australia. GrainCorp is also on the lookout for opportunities in prime overseas markets, particularly in Asia. AWB Ltd has already taken substantial steps in expanding into overseas markets through the acquisi- tion of value-adding assets and by taking joint venture positions. Among them is a 30 percent interest in Five Star Flour Mills in Egypt and a 51 percent stake in AWB Zennoh Limited in Japan. AWB also has minority holdings in Vietnam Flour Mills (VFM) and Shenzhen Ground Cover is brought to you by growers and the Federal Government through the publisher, the Grains Research and Development Corporation. Write to: The Editor -- Ground Cover, PO Box 5367, Kingston ACT 2064 Executive Editor: Ms Maureen Cribb, Publications Manager, GRDC; 02 6272 5525 Managing Editor: Brad Collis, Coretext; 03 9670 1168; fax 03 9670 1127 Design and production: Coretext; www.coretext.com.au Advertising sales: Hyde Media; 03 9870 4161; fax 03 9870 4163 Registered by Australia Post Publication No. NAD 3994 Australia's grains industry has started thinking hard about its place in the world, and realising that the bulk commodity supply chain that has served it well over a century is no longer enough. Many in our $8 billion grains industry are realising they are really part of a much bigger picture -- Australia's $50 billion agrifoods industry. As a consequence, many grain businesses, including growers and grower groups, are looking for ways to become involved in the grains value chain, either through processing or partial processing, or building relationships with end-users through quality-assurance initiatives. In contrast to a 'supply chain' dynamic, where production is often insensitive to market requirements and the focus is on efficient logistics, a 'value chain' is demand-driven and recognises the opportunities that all chain participants have to contribute to efficiency and to increase product value by meeting market requirements. The articles in this special supplement represent some of the activities that reflect the changing nature of the grains industry, as companies, groups and individuals seek to broaden their income streams by looking beyond grains' traditional treatment.
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