US-backed Ruralco irks Elders

Ruralco's rivalry with Elders has taken another twist as a giant US farm co-operative positions itself to become a major player in the local grain industry.

Minnesota-based CHS and Ruralco will use their partnership in grain broker Agfarm to expand operations in WA over the next few years.

CHS, a Fortune 100 company that sells about 52 million tonnes of grain and oilseed a year in 65 countries, purchased 50 per cent of Agfarm in July in a major coup for Ruralco.

Ironically it was the sale of Elders that brought Ruralco to the attention of CHS. It is understood CHS looked at the Elders rural services division before opting to buy into Agfarm - one of Australia's fastest growing agribusinesses - for about $10 million.

Ruralco managing director John Maher is about fly to Minnesota to discuss the Agfarm growth strategy with CHS executives. Mr Maher said Ruralco would use the CHS investment and its network of businesses to help Agfarm become "much bigger" in WA.

"It (the CHS partnership) stands us in really good stead in WA and nationally," he said. "They had never heard of Ruralco until the Elders sales process, probably because we are a house of brands."

Mr Maher said it was too soon to speculate on whether CHS would follow the lead of other big global players by investing in port and grain storage infrastructure in WA.

WA cooperative CBH declined to comment but has met CHS in the past to discuss business opportunities. CBH set up an office in Portland this year and plans to leverage its powerful position domestically to form reciprocal relationships with big players in the US industry trying to get a foothold in Australia.

Tension between Elders and Ruralco is running high after Elders rejected merger and takeover offers from the 12 per cent stakeholder.

Elders sold its Futuris automotive division for $69 million and won bank support to continue operating its rural services. Ruralco then raided seven senior staff from Elders' cattle export division to set up a rival business.