GrainCorp Forms JV with Japan’s Zen-Noh; Eyes Canadian Expansion
GrainCorp is forming a 50-50 joint venture with Japan’s Zen-Noh Grain Corporation with the goal of expanding its presence in Canada, reports ABC Rural. The joint venture will be established in Calgary, Canada where GrainCorp already controls two container loading sites and a malting business. The companies plan to establish and operate grain handling sites across Alberta and Saskatchewan with construction planned to start in the second half of fiscal year 2016, lasting until the end of fiscal year 2018, according to Bloomberg.
Zen-Noh Grain Corporation is a subsidiary of Tokyo-based Zen-Noh, one of the world’s largest agricultural co-operatives with 1,100 members, and accounting for 30% of Japan’s feed grain market.
Within the first two years of the venture each company will contribute C$30 million to the operation, which plans to source another C$60 million from financial institutions.
GrainCorp’s expansion across Canada’s Western Prairies, which will give it broader access to grains and oilseed supplies, is a means for the company to be able to offer its buyers more consistent exports while reducing the group’s risk associated with Australia’s weather conditions and transportation challenges due to its poor rail infrastructure.
"It is really about being able to perform at the level necessary to stay relevant to your international customers," GrainCorp CEO, Mark Palmquist told ABC Rural. "Having multiple supply chains from different geographical areas is part of that responsibility you have to that international customer."