GrainCorp's expanding vegetable oil processing business has begun cranking up new margarine and oil production lines in Victoria, and building extra canola seed crushing capacity.
In a major value-adding and processing efficiency move, Australia's leading oilseed crusher, GrainCorp Oils, has spent about $80 million upgrading its Melbourne food products packing plant and moving its spreads and commercial oil production and packing lines from Brisbane.
Work has just finished upgrading the quality of its oil operation at Numurkah in northern Victoria so it now produces refined food grade canola oil for GrainCorp’s own packing contracts and other bulk customers.
That same site's canola seed crushing operations will also expand about 25 per cent by next year as part of its $48m upgrade, taking capacity to more than 340,000 tonnes a year.
Australians each eat about 26 kilograms of vegetable per capita annually, with about a million tonnes of the 1m to 2m tonne canola crop grown in NSW and Victoria consumed domestically after being crushed for food oil and stockfeed meal markets.
Just 25 years ago Australia barely grew any canola at all, but today it’s our third biggest grain crop with almost 3m tonnes of seed exported for $1.3 billion in 2014-15.
Exports of canola oil are increasingly big business, too, up about 25pc in recent years to about 155,000t annually, worth about $162m (based on Australian Oilseed Federation estimates).
GrainCorp has other crushing and refining plants in at Millicent in South Australia, and Pinjara in Western Australia, plus a refining and blending facility in New Zealand and 14 bulk liquid terminal sites in Australia, NZ and China.
After announcing the upgrade at its Melbourne (West Footscray) and Numurkah plants two years ago, GrainCorp Oils began a strategic plan to shift advanced stage oil processing and packing from its 80-year-old former tallow rendering plant at Murarrie in Brisbane's eastern suburbs.
That move is set to conclude in May, shaving significant transport costs currently incurred trucking crude canola oil about 1500 kilometres north from Numurkah and bringing packaged spreads, oils, food dressings and bulk refined products back south to key industrial and food service markets in Sydney and Melbourne.
GrainCorp Oils was born in 2012 when the grain logistics and marketing giant bought and merged Gardner Smith’s oilseed crushing and bulk storage business and Goodman Fielder's oil refining and packaging operation Integro.
The $472m deal created Australia's largest vertically integrated grains and edible oils processor and included ongoing contracts to supply product for Goodman Fielder brands such as Crisco and Meadow Lea.
Most of those products are now produced at the 4.2 hectare West Footscray site, as are a host of other refined oils and blended lines trucked out in bulk 1000-litre pallecon containers destined for snack food makers or similar customers; 20-litre drums for restaurants, bakeries and the food service sector, or retail consumer-sized tubs and bottles.
Up to seven refining processes are needed to take crushed canola to the quality required for different domestic and export users.
Even the booming dairy-based infant formula and nutritional powder market relies on refined canola oil blends supplied by GrainCorp Oils.
"What we're doing is all about extracting more value from the grain we handle and developing new customer possibilities," said oils group general manager, Sam Tainsh.
"In the same way GrainCorp’s malt business and its stake in Allied Mills (flour milling and baking) add value to the crops GrainCorp buys and provide direct contact with end users, our oils business is also about getting more value from a greater vertical involvement in the supply chain."
Depending on how the end product is eventually packed, canola oil handled at Numurkah and West Footscray increases between 10pc and 50pc in value by the time it is on-sold to food processors and food service users.
The upgraded Melbourne site includes a spanking new food grade testing laboratory, 1.5m litres of bulk storage, warehousing and a major electricity network upgrade to drive its new high-tech stainless steel plant.
GrainCorp's biggest shareholder and global player in the edible oil processing market, the US-based Archer Daniels Midland (ADM), has contributed technical expertise to the West Footscray and Numurkah developments.
"They've got about 70 or 80 plants around the world so they know what they're doing," said Mr Tainsh a former grain trader in Australia and the US, who previously led GrainCorp's trading desks for a decade.
He said demand for healthy oils based on canola and other oilseeds was enjoying steady domestic and export growth.
Market growth was particularly likely in Asia where consumers were increasingly aware of healthy food issues and recent free trade agreements were opening up export options.
At Numurkah, where the original Gardner Smith crushing plant was built 25 years ago, oilseed is sourced from northern Victoria's canola cropping heartland and NSW's Riverina.
Crushing operations run around the clock, with about 60pc of the site's output being canola meal sold to the likes of poultry and piggery giants Inghams and Riverlea, and stockfeed maker Ridley Agriproducts, as well as dairy farms.
A heated press initially extracts about 20pc vegetable oil from raw seed, followed by a secondary process which removes more crude oil and prepares the product for refining and deodorisation.
