Weekly Agribusiness News Recap

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By Georgia Devenish - Agricultural Research Analyst at JLL

Say goodbye to Landmark and Ruralco and hello to Nutrien Ag Solutions. One of the first moves by Landmark's parent company, Nutrient Ltd, since the completion of $470 million acquisition of Rural Holdings in October has been to amalgamate and re-brand. 400 of its corporate-owned and joint-venture rural stores will transition over the next 12 months to the new brand with the process beginning in Dubbo this week. Stores are also starting to be merged in 38 locations where both Landmark and Ruralco branches currently exist.

Viterra has unveiled its $6 million upgrade to its Port Lincoln grain receival site. The investment comes as the company looks to both meet shipping demand from export customers as well as ease the transition to road transport. Earlier this year, Viterra made the decision to not renew its contract with Genesee and Wyoming Australia (GWA) for grain movement on the Eyre Peninsula. Grain trains on the Eyre Peninsula ceased operations in May 2019. Viterra Western Region Operations Manager, Nick Pratt, said, "The $6 million we've invested in this project forms part of our $15 million capital investment at the Port Lincoln site over the past three years, and we plan to inject an additional $3.8 million in 2020."

A long-standing supply partnership between Coles and Australian Country Choice (ACC) is drawing its final breaths. Its a 40 year old business relationship that has culminated in ACC and Coles moving rapidly away from their exclusive 'single customer' arrangement to focus on separate alternative business opportunities. The partnership had become increasingly under strain and sustained significant damage following legal challenges in 2017 which saw ACC file a Queensland Supreme Court action against Coles over entitlement to export beef and offals from the Cannon Hill business. For the previous 20 years, ACC had held the rights to market Coles product globally.

Moving forward, ACC is now developing its own beef brand and will produce, process and package animal protein for new customers in Australia and overseas. Coles is looking towards Asia to sell premium beef cuts into China's rapidly expanding middle classes with plans to open an office in China next year.

A joint venture between Cargill Australia, Namoi and Auscott has been dissolved. Cargill was the majority owner of Cargill Oilseeds Australia (COA) and Cargill Processing Ltd (CPL) with Auscott and Namoi equal minority shareholders of 15 percent in the joint venture. There were two facilities associated with the joint venture located at Narrabri in north-west New South Wales, and Footscray in Melbourne, Victoria. It was reported in May 2019 that the COA partnership and CPL investment recorded a loss of $4.8 million during FY19, which included the impact of trading losses, the mothballing of the Narrabri oilseed-crushing facility, and associated staff-redundancy costs. While the Narrabri crush ceased operation last year and is not expected to crush cottonseed in the foreseeable future, the Footscray facility will continue operations under Cargill ownership.

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Elders has appeared to emerge from 2018/19 with only a slight dint in profits despite raging drought conditions across the eastern seaboard. A $2.7 million drop in statutory profit after tax to $68.9 million was recorded by the rural services business, cutting Elders' net profit by almost four percent. However, its diverse national portfolio still delivered its forecast underlying profit of $63.8 million, similar to last year's best result in a decade. This week also marks the conclusion of the $469 million Australian Independent Rural Retailer merchandise business acquisition. It adds to the significant acquisition activity by Elders' over the past 12 months which included the purchase of the Titan crop and stock chemical business and Livestock in Transit insurance.

Agribusiness Thomas Foods International has seen its before-tax profits halved over the past financial year as drought bites into its earnings. The company's financial statements show its before-tax profit in the past financial year fell from $69.2 million to $34.5 million. In a statement from the company, "The impact of the drought and its effect on livestock costs placed pressure on margins and overall profitability across both the processing and distribution businesses." 2019 has also been a year of consolidation for the business, following the fire that destroyed the company's Murray Bridge plant in January 2018. In June 2019, Thomas Foods committed to a rebuild of its Murray Bridge plant.

Yonghui Superstores and Woolworths have announced a new cooperation agreement, providing the Australian counterpart with a retail channel in China. As part of the agreement, Yonghui will sell Woolworths' Australian branded goods through its physical stores and online via its Younghui shopping app. At 2019 China International Import Expo where the agreement was signed, Ming Mu, core partner of Yonghui Superstores, said "In 2018, Yonghui's sales of imported goods reached US$563 million of which Australian fresh food is about US$15 million. The total amount of Australian commodities is expected to exceed US$40 million in 2019."

Argentinian agricultural company, Cross Pacific Investments, has acquired a third Northern Territory property in 2019. The company purchased 'Sturt Downs' Station near Katherine for $6.8 million, after acquiring 'Scott Creek' Station in August and 'Manbulloo' Station in June. In total, Cross Pacific Investments now owns over 540,000 hectares in the Northern Territory with a total investment of more than $43 million. The company is owned by the Buratovich family who are involved in broadacre cropping projects across Argentina, Uruguay, Brazil and the US.

Nuveen, a Chicago-based investment manager and subsidiary of insurance services giant, Teachers Insurance and Annuity Association of America-College Retirement Equities Fund (TIAA), has acquired approximately 4,000 hectares of dryland cropping farmland near Moree in northern New South Wales. For a combined $24.8 million, Nuveen purchased Roger and Annette Turnbull's 'Wallam' and 'Roydon' properties. It's a move that takes the company's investment in northern NSW cropping land to nearly $50 million in just the last 12 months.

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