GrainCorp announces record $246 million half-year profit

GrainCorp has tamped down on hopes it will pay higher prices to growers as it posted a record $246 million half year profit.

GrainCorp chief executive Robert Spurway.

GrainCorp has tamped down on hopes it would pay higher prices to growers as it posted a record half year profit today.

GrainCorp managing director and chief executive Robert Spurway said the company’s record earnings had come off the back of two consecutive bumper harvests and surging demand for Australian grain.

The company reported earnings before interest, taxes, depreciation, and amortization of $427 million for the half-year ending March 31, up from $140m in the same period last year.

Net profit after tax rose to $246m from $51m last year.

The company handled a total of 14.7 million tonnes of grain through its supply chain in this half of the financial year, including 4.5 million tonnes in exports – close to half of Australia’s total exports for the period. These numbers represent a significant export increase on the corresponding period last year, when the company handled a total of 14.5 million tonnes of grain and exported 3.1 million tonnes.

Mr Spurway said there had been “some noise from grower groups” about prices paid to growers, but “the fact of the matter is that Australian growers are receiving record prices for grain at the moment”.

GrainCorp was shouldering “significant costs” in the storage and transport of grain, he said.

“When you look at the time between when the grain is ordered, and when it’s expected to be delivered, there are significant costs associated with the funding of that grain, of course, but also the freight and transport and storage of that grain, given many of the purchase contracts are now four to six months out from time of purchase,” Mr Spurway said.

GrainGrowers Ltd chairman Brett Hosking has called for an inquiry into grain pricing. Picture: James Wagstaff

The comments came after grower organisations NSW Farmers, Grain Producers Australia and GrainGrowers Limited increased calls for an Australian Competition and Consumer Commission inquiry into grain pricing.

“We don’t have that transparency of the supply chain, in terms of what the end user is paying for the grain, what the freight component is, and what the port loading component is,” Grain Growers Ltd chairman Brett Hosking said in March.

“We’re effectively given a price at the silo, and that’s the information we have to work on.”

NSW Farmers vice-president Xavier Martin told The Weekly Times last week farmers needed to know where hundreds of dollars in price mark-ups were going.

“When (growers) look at what customers are paying for their grain in Japan or Egypt or wherever and translate that back to farm gate prices, the question is: who is getting away with 30 per cent or more of that cheque?” Mr Martin said.

NSW Farmers president Xavier Martin.

Black Sea disruption to last “years”

Mr Spurway told investors Russia’s invasion of Ukraine had driven demand for Australian commodities, and disruption from the conflict was likely to last years.

“Whilst it’s very difficult to predict exactly what’s going to happen in the Black Sea, it’s certainly our view that it’s going to be disrupted for a significant period of time that could run to several years, given the very disruptive hostilities on the ground in Ukraine, the infrastructure in that country that’s been damaged, and put bluntly, the risk of grains being exported from there, even as things start to be rebuilt,” Mr Spurway said.

The company announced it had made “full provision”, in the order of $10m, for GrainCorp assets in Ukraine.

GrainCorp announces AgTech investment

GrainCorp announced today it would launch a new initiative to invest in AgTech start-ups through a $30m corporate venture capital fund.

To date, GrainCorp has taken out a 15 per cent investment in Hone, a company specialising in the chemical testing and analysis of soil, crops and grains.

Mr Spurway said the company was likely to look at three or four investments annually.