CBH Board on tour - day nine Kevin Fuchsbichler

This morning, Directors Rod Madden, David Willis, Samantha Tough, Wally Newman and John Hassell joined the Interflour team as observers of their board meeting.

The rest of us had an early start to look at the IndoFood noodle factory where we were welcomed and given a presentation on all of the types of food that they produce.  They make about 15 billion packs of noodles per year.

After a tour of the factory we tasted all of the various types of noodles which were very good and followed by a banquet of indigenous foods from the Island of Java. 

Leaving there we went to a bakery that produced traditional buns and bread products. They had 700 three-wheel bike vendors that they supply twice a day, morning and afternoon.

Next we went to a factory that makes packs of pastry used to make steamed dumplings.

Both factories use flour from the Eastern Pearl Flour Mill, which WA growers have a share in through CBH and Interflour.  Both factories were very labour intensive and the bakery was famous for making bread crocodiles which they use at weddings. 

CBH Board on tour - day eight by Trevor Badger

Today we visited Wilmar, China's biggest oilseed crusher with approximately half the capacity devoted to canola and soybeans respectively.The end oil product of canola crushing is the Wilmar brand Arowana (recognisable by the famous cat fish icon) is the worlds best selling canola oil and it is a multiple award winner worldwide.

We traveled to the crushing plant and had a look at the dedicated port. We watched one of their coaster barges unloading canola with a grab at 300 tonne per hour. Barges were stacked four deep and three long waiting to discharge. This port has a draft of 4.5 metres, so can't take any ocean going vessels, a minor constraint when they unload the equivalent of a Panamax every fortnight.

Due to renovations we were unable to meet in their offices so were bussed off to a nearby hotel.

Wilmar are old friends of CBH with the first trade occurring in 1960 with a cargo of wheat to the Federal Flour Mill in Kuala Lumpur, Malaysia.

Of greater significance was China's first ever import of canola in 1999 which CBH supplied and Wilmar crushed. The relationship has gone from strength to strength and is of immense value to our members.

Customarily after the walk and presentations our gracious hosts we had a delicious lunch of Chinese and local delicacies.

Taking a moment to reflect

With great sadness today we learned there was a fatality within our network back at home. It is times like these we feel just how far we are from home. 

Our thoughts, like everyone at CBH are with the gentleman's family and friends.

We have taken some time here to reflect on safety and what it means to us. The network shutdown was an opportunity for everyone in WA to do the same. 

CBH Board on tour - day six David Willis

A busy day for the Board visiting flour and malt producers in the amazing industrial zone in Southern China's Guangdong region. A real feeling of development and growth and in the case of the food producers we met, a push to meet the need for protein as part of the changing appetites of China's huge and emerging middle class.

We met with Sinograin a regional Government owned importer of grains, situated on the Pearl River. Sinograin's historical business has been as a storage facility to provide food security to the Guangdong region but it has changed it's focus to logistics and distribution. It currently has storage capacity of 500,000 tonnes and has plans for expansion to 1 million tonnes over the next three years.

We met with Wilmar, a Singapore listed food producer operating in 50 countries. In China Wilmar operates 200 plants in 51 locations. They stressed the importance of large multi plant sites as a means of minimising overhead costs such as energy and administration.

Our final visit for the day was with Supertime Development Ltd the worlds 6th largest maltster with nine plants in China. The company is owned by Guanding Provincial Government but based in Hong Kong. Supertime were the first commercialised Government owned company in China. The CBH Directors did a tour of the plant which included the top of one of the malting towers and an incredible view of the port and surrounding industrial zone. We had dinner with key Supertime executives which was an excellent way to discuss the industry and ask many questions from the day.

In all these visits the Directors were able to get an intimate knowledge of the attributes of WA wheat varieties and how these are valued in the production.

CBH Board on tour - day five by Vern Dempster

Today we are in Beijing to attend a meeting with one of CBH’s customers COFCO. The meeting was with Madam Yang and the wheat team. Madam Yang is one of the most experienced in the wheat business with 28 years in COFCO. The COFCO team explained how the Chinese wheat industry operated - more than 110 million tonnes produced this year. The flour milling industry has around 70 million tonnes of capacity with the remainder for feed and seed.

So why does China import? The majority of China's production is mid protein (similar to APW/AH) however they require both low and higher protein wheats to produce different quality products including biscuits, cakes and bread. COFCO also discussed about the dry conditions on the current corn crop which may see lower yields and therefore could see an increase in demand for other products including feed wheat for the animal feed industry.

Subsidies were also discussed - wheat in China currently has a minimum price which is increased each year to encourage production. A new system is being trialled with cotton and soybeans which includes a subsidy direct to growers, rather than a government guaranteed minimum price which requires the government to purchase the grain. The new system will still allow the private companies and end users to purchase the grain with the grower receiving a subsidy.

 President Patrick Yu with the COFCO teams inducing the barley and wheat teams. Patrick Yu provided us with a presentation on COFCO with a few interesting statistics:

-          The organisation commenced in 1949 as a state owned enterprise

-          COFCO has a number of subsidiaries including seed development, crop production, grain and oilseed processing, dairy, meat, and consumer’s products as well as financial services, insurance and real estate

-          The company processes and/or trades approx. 100 million tonnes per year

-          COFCO has approximately 41 million tonnes of processing capacity.

-          The organisation’s asset value is approx. USD50 billion making it the second largest agriculture company after Cargill

-          COFCO's turnover is approx. USD60 billion

-          The overarching company strategy is 'field to plate'

-          China is expected to import up to 185 million tonnes of grain and oilseeds within the next 10 years.

In the afternoon an excellent meeting was conducted with Mr Zhou the Vice General Manager who explained the history of Beijing Yanjing one of the top four breweries in China. Trevor Badger provided a good explanation of each variety as well as each member of the board explaining the varieties and potential production in their region. The team asked a number of questions about the quality of the product; alcohol content (most Chinese beers are between 3.5-4% alcohol); and the growth in the market (approx. 8% per year)

A great tour of the bottling plant preceded and after a very tough walk in hot conditions it was time to taste the product and provide our expert opinion in the Beijing Yanjing Brewery Bar. 

A few interesting facts about Beijing Yanjing:

-          The brewery was started in 1980

-          Their total malt consumption 400,000 tonnes

-          Yanjing’s beer production 5.7 million hectolitres

-          They have 49 breweries in 19 provinces

-          Yanjing’s preferred varieties are  Baudin, Gairdner, Hindmarsh and Bass and they prefer protein to be in the vicinity of 10.5%

CBH Board on tour - day two by Trent Bartlett

The alarm went off at 3am for a few adventurous directors who were heading off to Tsukiji Market in Tokyo - the famous Tokyo Fish Market. There were unfamiliar sights and smells and a very unsafe environment - but they lived to tell their fish stories. Everyone else also needed to get up reasonably early, each of us separating our luggage to store at the Royal Park Hotel in Tokyo and just take an overnight bag for our flight to Takamatsu later in the day.

We had a quick but familiar breakfast this time before getting onto the bus to head for Nisshin Flour Tsurumi Mill. No sooner had one Director realised they had left their passport behind and we had to stop the bus while they ran back - when someone realised we were also missing a Director. We already had 2 great contenders for being fined for misdemeanours and we were not even 100m from the hotel!

 We arrived at Nisshin Flour Mill after a one hour bus trip, being fully briefed and updated on the importance of this visit by CBH Group. The Nisshin Tsurumi plant is the largest wheat flour mill in Japan, supplying 10% of the entire Japanese wheat flour market and is a long standing customer.

The Tsurumi Mill is on a 26 acre (106,800m2) site, located next to the heart of Tokyo City, on the waterfront of Keihin Industrial Area. The Tsurumi plant receives imported wheat directly from wheat vessels at its own berth, and supplies varieties of flours for bread, noodle, pasta, cake, snacks etc, for the east side of Japan. The plant has 7 milling units and is operated by 143 employees on a 2 or 3 shifts a day basis. The mills operate on 3 shifts working 24 hours a day.

Our delegation was welcomed by the Executive Director and his team and then shown one of the best presentations on the flour milling process many have ever seen. We all donned very flattering/figure hugging white coats, hair nets, hard hats, Velcro straps to clamp our pant legs above the ankles as well as gauze bootees for our shoes. We have since made sure all photos of the group modelling these outfits were destroyed – except this one!

Our tour of the flour mill and port left us very impressed. The cleanliness standards were incredible, as were the rigid processes of testing that the mill goes through to maintain its rare ISO quality system rating. The temperature inside the mill combined with the lab coats made it very warm indeed. Back to the office where we asked questions before the CBH Chairman presented the Executive Director with a gift and gave a thank you speech. Following a tour of the Mill we boarded the bus and were once again treated to a delicious lucky dip Bento Box lunch which we rushed down as we made the short trip to Haneda airport for the domestic flight to Takamatsu.

The third misdemeanour for the day occurred when the 2 groups were dropped off - Group 1 got off at Group 2's terminal and vice versa. The bus driver had to do another lap between the terminals and one group got off the bus and then the other group got on. As you can imagine, there was an incredible amount of sledging being thrown as we passed one another. By this time, you could imagine that our bus driver was going to be happy to see the end of us!

 An uneventful couple of flights later and we arrive into Takamatsu to be greeted with a lot of rain courtesy of an approaching typhoon with a rating of 11. After a quick confirming head count this time, we boarded our charter bus for Kotosankuku Hotel - a very traditional Japanese hotel. After checking in late that afternoon, all Directors met on the top floor of the hotel to experience onsen before dinner, which is a bathing ritual followed by stepping into a communal hot spring water bath. Andy and Jay went off to meet executives from Zenbakuren, Mitsubishi and Mitsuhiro Takabatake.

These organisations are important CBH customers and approximately 60% of food barley (shochu barley) is procured for Zenbakuren from CBH through Mitsubishi. Zenbakuren is the All Japan Barley Processors Association established in 1951. It is a cooperative association consisting of 66 grain processor members. At 6.30pm, the Board and representatives from our host as well as the President from Mitsuhiro Takabatake met to have dinner. The room had been laid out in a very precise way, with each person allocated a seat on the floor with a low tray in front of them where each dish of the evening was either placed or cooked in front of us. The opportunity to talk business with our hosts in such an environment was very special and particularly memorable.

A Japanese drumming troupe from a nearby town gave an impressive and energetic performance to demonstrate some of the favourite traditions of Japan. The dinner ended with speeches and an exchange of gifts from CBH and the scene was set for an important meeting of the Board with the broader organisations on Saturday. After doing our best to promote more CBH barley sales to Japan by drinking shochu, the Directors retired in pairs to share twin tatami/futon beds for sleeping in Japanese style on the floor. It was a truly memorable day that saw all Directors reflecting on the success of the Japan office and holding wide ranging discussions amongst us about some of our strategic considerations for supply chain development in Japan and Asia.

CBH Board on tour - day one by Brian McAlpine

The board, CEO, and Company Secretary have started on a 10 day tour starting in Tokyo, Japan. Led by Jason Craig, GM Marketing and Trading, the purpose of the tour is to assist in building important relationships with some of our key customers. Today was all about Zen-Noh, Japans largest co-operative with 9.4 million farmer members. Its business consists of rice, vegetable and fruits, livestock, materials and fuel with an annual turnover of $50 billion AUD. CBH has had a long relationship with Zen-Noh of over 40 years and currently supplies every year 300,000 tonnes of feed barley, 200,000 tonnes of wheat, 20,000 tonnes of lupins and 10,000 tonnes of oats. The morning was spent visiting a silo complex of Zen-Noh at Kashima Port, an hour from Tokyo central.

The artificially excavated port covers many industries but the area of interest is the feed grain area. With one 65,000 tonne panamax berth and three 3,000 tonne Coaster berths, feeds by a common chain conveyor system three competing silo terminals, and 11 feed factories producing 3.9 million tonnes per annum. The shared resources are a great example on how MGC could be developed. A brief walk around the facilities followed a presentation describing the details. Questions on their silo maintenance were raised with some possible learning’s. Lunch was at a traditional Japanese restaurant that interestingly, was owned by the Zen-Noh Co-operative. This business venture was in response to its Wagyu beef members getting fluctuating and decreasing returns for their premium product due to the increasing dominance of larger supermarkets. This is a great example of a co-op identifying a strategic issue of its members and investing accordingly.

The afternoon had us visit the head office of Zen-Noh in which we were to have presentation from senior executives. Yoshiki Saito, President of the Feed & Livestock division, delivered the welcome speech through an interpreter. Following Neil’s greeting speech, Unicoop (similar to our Marketing & Trading division) President gave a grain business overview. A series of further meetings provided some good insight into possible opportunities that may arise between the two businesses and the unique relationship that two farmer co-operatives have.

To complete the very positive afternoon meetings a formal dinner was held with the Chairman and CEO of Zen-Noh attending alongside the afternoon presenters. In a very exclusive and traditional Japanese garden setting with the Tokyo Tower in lights near-by, a very relaxed and fun filled night was had by all. As large and successful Zen-Noh is, it is a co-operative that is working for the benefit of its members in the very same way that CBH is.