Bunge’s first rapeseed export en route to Europe
25 Jul 2017 --- Bunge’s operations include originating oilseeds and grains from the world's primary growing regions and transporting them to customers worldwide – but this is the first time rapeseed exports have been shipped from Australia to Europe.
Bunge’s Bunbury port in Western Australia has exported its first batch of rapeseed to crush plants in Europe for edible oil and fuel production.
The 45,000 metric ton consignment is a new addition to the Bunbury port, which has exported a combined 700,000 metric tons of wheat and barley to customers in Asia and the Middle East since opening in 2014.
According to the company, this Australia to Europe shipment represents the strength of Bunge's value chain and “logistical efficiency.”
“From the purchase of the rapeseed from local farmers during harvest, the storage of the rapeseed in Bunge's storage sites between growing regions and the port, to transportation and export, Bunge’s footprint is present every step of the way,” the company says.
With a high oil content of about 47 percent and a low moisture content of about 6%, the exported rapeseed is ideal for producing edible oil.
It is certified by the International Sustainability & Carbon Certification, which means the rapeseed can also be used for fuel production in the European Union.
Rapeseed is one of the main crops grown in Australia, along with wheat, oats, barley and sorghum, and about 60 percent of these grains are exported. Europe and China are the primary destinations for rapeseed and Southeast Asia and the Middle East are the major destinations for wheat and barley.
Bunge’s US$250 Million competitiveness program
This new rapeseed export campaign comes at a time when Bunge has just announced a cost-cutting drive which will “re-engineer” the way it operates and reduce overhead costs by approximately US$250 million once fully implemented.
The US grains trader says it will achieve these cost savings by aggressively adopting a zero-based budgeting process that will target costs in specific budget categories, simplifying its organizational structure, streamlining processes and consolidating back office functions globally to improve efficiency and scalability.
In addition, Bunge will be reducing its 2018 total capex spend from a previously announced US$750 million to US$650 million, according to a statement.
“We have a unique, irreplaceable footprint and a strong, growing customer base that relies on us for competitively priced, high quality products under all market conditions. Demand and margin trends are positive, and the Competitiveness Program is a transformational next step to re-engineer our organizational and cost structure, which will advance our growth agenda and create significant value for our shareholders,” said Soren Schroder, Bunge’s CEO.
The company expects the Competitiveness Program to provide modest benefits to 2017 earnings. Approximately US$100 million of the savings are anticipated to be realized in 2018 and US$180 million in 2019.
“We started the process to launch this program in early 2017 and are now beginning implementation. I’m confident that these steps will improve our competitiveness and position us well as market conditions improve,” said Thomas Boehlert, Bunge’s CFO.
“Market conditions during the second quarter were challenging, driven by unprecedented farmer retention in South America, which pressured margins throughout the chain,” adds Schroder. “Increased farmer pricing early in July, as well as more dynamic markets and continued strong demand, lead us to expect much improved Agribusiness conditions in the second half of the year.”
Earlier this year Anglo-Swiss multinational Glencore claimed to have made an “informal” approach towards Bunge Ltd, which sparked possible takeover speculation. However, Bunge was quick to say that is was not engaging in business discussions.
