WA'S grains landscape could be set to undergo a massive change with a multi-national company looking to bypass the CBH Group system and ship grain direct from Bunbury.
Giant global grain trader Bunge is eyeing off a $30 million investment in building a 50,000 tonne grain storage facility at the Bunbury port and believes it could save its suppliers 10 to 20 per cent in Freight on Board (FOB) costs.
While Bunge has declined to provide formal comment to Farm Weekly about the potential investment, it has been the subject of persistent industry speculation throughout the past year.
And it appears the WA government is supporting the new move to improve competition in grain logistics.
In January, WA Transport Minister Troy Buswell approved permits to allow 500,000 tonnes of grain to pass through the port facility in the first two years, starting in 2014.
Once that two-year cap is lifted, the Bunbury Port Authority is likely to double the potential export volume to one million tonnes, with grain going to key markets in South East Asia.
But that capacity could be even greater down the track depending on the local market's reaction.
The deal would see a portion of the grain volume transported off farms to the Bunbury port via roads, with growers also using on-farm storage facilities to increase their potential FOB savings.
It's believed growers could potentially save the 10 to 20pc on FOB costs, by bypassing the CBH monopoly bulk grain storage and handling system.
Bunge's arrival at the Bunbury Port would also mark the first significant challenge to the CBH grain logistics monopoly in WA, after five years of the deregulated wheat export market.
It would also be the biggest single investment in a major logistical operation outside of CBH's 200 storage sites in WA, including the Metro Grains Centre and major port facilities at Albany, Esperance, Geraldton and Kwinana.
Bunge has been negotiating privately with the Bunbury Port Authority and other parties to finalise details, with an announcement expected in coming weeks.
The Pastoralists and Graziers Association (PGA) has also been involved in developing and assisting the negotiations, having been a long-time supporter of open market competition and a critic of cross-subsidies within the CBH system.
PGA Western Graingrowers chairman John Snooke declined to provide formal comment on Bunge's intention to invest in grain logistics at the Bunbury port.
But he said the PGA welcomed any investment in the WA grains logistics supply chain.
WA Liberal's Agricultural Region MLC Jim Chown has also been pivotal in bringing the parties together, to advance negotiations.
Speaking on Monday, Mr Chown said major grain producing countries such as the European Economic Community and the US have competition-based grain export systems and significant government subsidies, to enhance the commercial viability of their local grain industries.
He said to have an international company such as Bunge, with an outstanding reputation in grain handling and exporting throughout the world, to endeavour to make a large investment at the Bunbury port, to be another exporter of grain out of WA, could only be good for the industry in this State.
"I believe that with the deregulated export market we now operate under, this move will further enhance the commercial viability of grain growing throughout the agricultural region," he said.
"This proposal has my support and the government's support."
Mr Chown said the deal would potentially bring a large tonnage of grain to the Bunbury Port to offset the loss of wood chip tonnage from the site.
"That would make the port even more viable than it is today," he said.
Mr Chown said CBH had stated publicly at Federal Senate hearings and through the media that it was not afraid of supply chain competition and encouraged it.
"I'm sure the CBH board comprehend that competition in regards to the transport and handling of grain was going to happen in WA at some stage," he said.
"If the CBH system is as good as they indicate they should have nothing to be afraid of in regards to this proposal from Bunge."
For the deal to go ahead, it's understood Bunge Australia would require final approval from its parent company.
Bunge is a global agribusiness giant with 32,000 employees spanning 40 countries, with a market capitalisation valued at close to US$9 billion on the New York Stock Exchange.
It engages in grain production and logistics activities globally to support food and feed products, renewable fuels, oil seed crushing and other value adding businesses.
It's the world's largest producer of soybean oil and has a huge stake in the South American fertiliser market.
In February 2010, Bunge purchased five sugarcane mills in Brazil, making it the third largest sugar and ethanol producer in Brazil.
In Australia, the company is an accredited wheat exporter under the legislative scheme administer by Wheat Exports Australia.
However its presence in the WA grain market has been limited during the first four years of deregulation, with most of its grain buying activity in the Australian market focussed on the east coast.
The new Bunbury export facility would be a potential link for WA grain producers into Bunge's extensive customer base in the booming Asian market, to boost its global strategy to capitalise on future food security concerns and inter-connected opportunities.
A spokesperson for CBH Group said it had been preparing its business for a competitive environment for some time.
"It's a very dynamic marketplace and our planning process takes into account any number of potential events which may occur in the environment we operate in," the spokesperson said.
"Our focus, as always, is on making sure we continue to provide the lowest cost, most efficient supply chain for growers."