GRAINCORP is forming a joint venture with Japanese farm co-operative business Zen-Noh Grain Corporation to source crops in Canada through new receival sites in Alberta and Saskatchewan.
Zen-Noh Grain (ZGC) is a subsidiary of Japan's big National Federation of Agricultural Co-operative Associations (Zen-Noh) which supplies farm inputs and markets agricultural produce.
ZGC already exports about 13 million tonnes of corn, soybeans, sorghum and and other grains from the US and other global markets, primarily for consumption in Japan.
The big eastern Australian grain company will have a 50 per cent stake in the new Calgary-based joint venture which plans to operate a fully integrated grain and oilseed supply chain for the origination, marketing, storage, handling, distribution and exporting of Canadian crops.
To support the start-up phase, including construction and commissioning of new sites, GrainCorp will contribute $30 million in the next two years, while the joint venture will source $60m in additional funding from financial institutions.
Construction is expected to start from the second half of this financial year and run through to the end of 2017-18.
The joint venture's construction plans are subject to the completion of due diligence of the potential sites, as well as obtaining other customary regulatory and planning approvals.
GrainCorp's contribution to the start-up budget will be funded from existing cash and debt facilities.
"This is an exciting opportunity to partner with one of the world's most respected agricultural organisations and deepen our relationships with our international customers by growing our grain origination capability," said managing director Mark Palmquist.
The Canadian move was in line with GrainCorp's growth strategy.
"A key part of GrainCorp's value proposition for international customers is to have a multi-origin offering, so we are in a position to offer a solution for a broader range of requirements," he said.
"This gives us greater relevance and a broader platform to engage with the customer, creating more opportunities to offer our services.
"Of course, the new business also benefits grain and oilseed growers in the Canadian Prairies, by providing an independent and alternative pathway to market."
President and chief executive officer of Zen-Noh Grain Corporation, John Williams, described the venture as a good opportunity to grow his company's Canada business with "a trusted partner".
"It allows us to strengthen further our ability to supply our customers in Japan and Asia and we look forward to a bright future for the joint venture," Mr Williams said.
GrainCorp existing Canadian marketing office will support the joint venture to manage the origination process with Canadian growers.
Discussions have already commenced in relation to rail and port access for the joint venture. Zen-Noh is one of the world's largest agricultural co-operative organisations with its 1011 member co-ops with consolidated revenues totalling more than $71.2 billion (6.2 trillion yen) of consolidated revenues.
ZGC was established in 1979 by Zen-Noh and JA Group, building a grain export elevator at Convent, Louisiana in the US in 1982.
