Grain giant backs CBH vision

Australia's biggest grain grower has thrown his weight behind CBH investment plans, which include setting up a co-operative on the east coast.

Ron Greentree said he met CBH staff during one of their scouting missions to NSW and was open to doing business with them.

The former GrainCorp chairman's ringing endorsement came a day after _WestBusiness _ revealed details of CBH's plans in an exclusive interview with chief executive Andy Crane.

Mr Greentree has cropping operations covering more than 80,000ha around Narrabri and Moree where CBH is considering setting up a supply chain into its Newcastle Agri-Terminal.

He said CBH was the best storage and handling operator in Australia and "way ahead" of GrainCorp, which dominates the industry on the east coast.

Mr Greentree said some east coast growers would jump at the chance to start their own co-operative backed by CBH.

"I understand the concerns that some of the co-op members over there might have, but unfortunately WA has drought, too, and I see this as a great drought-proofing move by CBH," he said.

"It gives CBH the opportunity to make money over here when they are not making as much over there, and it allows them to get the range and certainty they want for overseas customers."

Others big players questioned the wisdom of CBH entering the crowded east coast market.

They said competition in grain accumulation in northern NSW was intense and warned CBH may struggle to attract the volumes needed to make investment in up-country infrastructure and rail capacity worthwhile.

The critics pointed to a GrainCorp submission to the Australian Competition and Consumer Commission in November that described Newcastle as Australia's most competitive port for the bulk export of grain.

GrainCorp's submission said the three rival terminals at Newcastle had 4.3 million tonnes of annual elevation capacity but the average demand was only 1.1mt with peak demand of 1.8mt.

Mr Greentree said CBH had already ticked the hardest box with its stake in NAT and could accumulate up to 400,000t in its first year of operations through a relatively small investment in rolling stock and a fast-loading sub-terminal at Narrabri.

He said CBH could tap into the on-farm storage of growers in the region and undercut GrainCorp's rail freight rates, which were more than $40/t between Narrabri and Newcastle compared to about $14/t in the coal industry. The NAT, part-owned by CBH, Olam and Glencore, has a loop rail connection whereas GrainCorp had to uncouple and shunt wagons.

CBH will make a decision on whether to proceed with an east coast business within months.