Wheat for the World

When brothers Warwick, Miles and Ewan Read pull into their southeastern Australian fields to start planting, they’re not thinking about how they’re helping to fill a supply chain of grain that will be used to feed the world. Just like farmers in the U.S., they’re driven to get the best yield out of each acre, then the best price.

“With land prices up to $3,000 an acre, we can’t afford to make mistakes,” says Warwick about their wheat, barley, canola and sheep operation. The Reads farm more than 10,000 acres near Stoneleigh on the southern tip of Victoria, Australia, a two-hour drive west from Melbourne.

In the world’s third-largest wheat-producing country, Australia’s farmers aren’t so different from their American counterparts, except for their location Down Under and, of course, that Aussie accent. And seasons are flopped, so as U.S. farmers finish harvesting, Australia farmers begin planting.

Producing an average of 25 million tons of wheat annually, Australia is the fourth-largest wheat exporter. With only 23 million people, the nation can’t consume all that grain, so the additional tonnage ends up in the export market.

Around the world, more than 222 million acres of wheat are harvested every year, making it the most planted crop and the largest source of vegetable protein in the world. It’s also a crop that’s harvested somewhere around the globe every six weeks.

In Australia, the Reads are part of that wheat-producing machine, and they are getting better at using precision agriculture technology to maximize efficiency and yield. Last year, their wheat crop averaged 72 bushels an acre.

“Our biggest limitations are with rainfall and soil variability in our paddocks (fields), so we’ve been soil mapping in 2 1/2-acre grids and using variable-rate fertilizer application,” Warwick says. “We used to blanket-spread lime at 2 tons per hectare, but we’ll be cutting back on that with more precise placement.”

The Reads are so sold on the early benefits they’re seeing with new ag technologies that they’ve invested in a start-up precision ag company.

To help keep the wheat pipeline full, especially for Asia Pacific markets, CHS entered Australia two years ago. “We’re focused on Asia Pacific markets and on sensible growth with the right returns from the right assets,” says Bryce Banfield, vice president, CHS Asia Pacific.

How does a little-known company like CHS establish itself in a diverse country like Australia? Strategically, according to Banfield.

Initially, in 2013, CHS and Banfield focused on connecting with farmers to quickly accelerate growth in grain origination. CHS formed a joint venture with ruralco Holdings limited and became partners in its Agfarm division, which works with more than 4,000 grain growers in Australia.

“Because it has strong brand recognition and relationships with growers, Agfarm helped us interface immediately with growers for grain origination,” Banfield says. “that helped CHS get traction with farmers quickly and gave us a good, solid base to kick off our business.”

Wheat marketing changed dramatically in 2008 when the Australian Wheat Board international marketing monopoly was dissolved. this deregulated the government’s marketing of bulk wheat exports and opened the door for new business relationships.

The partnering didn’t end with ruralco Holdings. CHS completed the next step 15 months ago by formalizing a joint venture agreement with Broadbent Grain, a logistics expert in both the domestic Australia market and the burgeoning container export market.

Most of the 20-foot wheat containers that Broadbent fills hold 800 bushels of grain. these days, they are usually bound for southeast and north Asia.

Broadbent specializes in storing and handling grain through its six storage and packing facilities along the southern and eastern fringes of Australia, close to ports and export markets.

When CHS was looking for a strategic growth partner in Australia to get closer to growers and fill its supply chain, Broadbent fit the bill, says Banfield. “Culturally and strategically, our businesses are aligned.”

Steve and Michael Broadbent agree. “We work with more than 1,000 farmers in Victoria and New South Wales, all the way to central Queensland,” says Steve, who, along with his brother, has taken over and grown the family business that started in the 1950s. Besides having more than 500,000 tons of grain storage on various sites, they run a fleet of 35 semis, hauling and storing grain for their farmer customers.

Although they have some vertical silos and sheds, most Broadbent storage is in horizontal bunkers, much like overflow piles of grain seen at co-ops in the U.S. during peak harvest.

“We have good domestic consumption for wheat, canola and barley, especially for the dairy markets,” says Steve. Other domestic use of grain goes mostly to flour millers and feed manufacturers, plus to poultry and beef production enterprises. “We also have a growing export business, much of it through Melbourne. Farmers either sell their grain at harvest or store it, what we call warehousing. They either truck it here to our site or we truck it for them.”

In 2011, Broadbent Grain built a facility in Queensland to capitalize on the container shipping export market. The site, about 75 miles west of Brisbane, handles 200,000 tons of grain a year and can fill 60 containers a day, each holding 25 tons of primarily wheat, but also sorghum and chickpeas. The facility can store 10,000 tons in vertical silos, not bunkers. After packing, containers are trucked to Brisbane for export.

For Ash Butler and his dad Graham, having the Broadbent facility at Toowoomba as a marketing option is a plus for their 7,000-acre Mount Tyson operation. They also sell grain to area feedlots and feed mills, and even directly to flour mills.

Wheat, which helps retain soil moisture after harvest, gets top billing in what Ash calls their big five rotational crops: wheat, barley, sorghum, chickpeas and cotton. “Our farm is zero-till,” says Ash, “which means we need crops like wheat and barley to provide ground cover once harvest has finished. Controlling field traffic also allows us to reduce impact on the soil’s ability to retain moisture.”

the younger Butler made a decision to return to the farm and become part of the wheat evolution in Australia. “After a few years of working and traveling, last February I came back to the farm to work alongside my father because of the lifestyle and flexibility farming offers,” says Ash. “dad always says, ‘If you enjoy what you do, it’s not considered work,’ and I don’t think I’ve worked a day since I returned — except for sweeping out silos.”

Shane noble, manager of the Queensland facility at toowoomba, says the company recently increased volume and efficiency by adding two inverters to fill containers faster. Inverters mechanically prop containers at an angle so they can be filled with grain quickly and efficiently.

“We do all dCt (delivered container terminal) work from this location and sell a lot to CHS for overseas shipment,” noble says.

In the past five years, he says he’s seen huge growth in the container market with most being exported to China and Southeast Asia. In taiwan and other countries, many customers can’t handle a big bulk shipment of grain, so containers offer a better fit.

Broadbent Grain is building a facility at Ballarat in Victoria that will be completed this year for export through the Port of Melbourne, the largest container port in Australia. the facility will include more storage and container packing abilities similar to those in toowoomba.

Container shipping continues to be a cost-effective way to ship grain, especially for grain operations in Australia, says Justin Cauley, merchandiser at CHS Grain Marketing.

“When Southeast Asia ships computers, toys and clothes in containers to Australia, those containers get backfilled with grain and returned to Southeast Asia,” he says.

Since wheat is grown almost everywhere in the world — and yields well even in arid areas — there’s almost a nonstop flow of it into the global marketplace. “After wheat is harvested in the U.S., then the crop comes off in Australia, then South America and that continues around the world,” says roger Baker, wheat merchandiser, CHS Grain Marketing.

“At CHS, wheat is our core. It’s what we were built on and that’s why it’s so valuable to us,” says Baker. “We’re obligated to create value from the crop for our farmer-owners.”

Most U.S. wheat is marketed domestically, while growers in Australia and the Black Sea region rely more on exports. Still, the export market is important to U.S. farmers, Baker explains.

He points out that CHS has also made strides in Canada since the 75-year-old grain trading monopoly held by the Canadian Wheat Board ended in 2012 and CHS opened a grain trading office in Winnipeg, Manitoba.

“Canada is a market we want and we’re trying to build it every day,” says Baker, who helps coordinate wheat origination year-round for domestic and foreign markets.

CHS also operates 12 retail locations in Alberta and Saskatchewan that provide agronomy and financial services to farmers.

As a farmer-owner of CHS, Todd Yackley often wonders where the 10,000 to 20,000 acres of wheat he grows annually ends up.

But it doesn’t really matter to the Onida, S.D., producer, because he says he knows that CHS — with its global connections — finds the best home and price for his wheat.

“I would hope the U.S. could supply the whole world with wheat, but I know that’s not a possibility,” he says. “It takes a lot to feed the world.

“I’m glad that I’m involved with CHS because we need their help in pursuing markets and connections around the globe,” he says.

Yackley adds he is proud of the high-quality, high-protein wheat his family grows in central South Dakota and continually looks for ways to maximize yields for more profit. “If farmers are growing a good crop and doing well, that’s good for the people up and down main streets in our small towns,” he says.

Adding to the wheat value chain for farmers is what Denver-based Ardent Mills is all about. With more than a year under its belt, the premier flour-milling company operates 40 mills, three bakery mix facilities and a specialty bakery in the U.S. and Canada. Ardent Mills combines the operations of ConAgra Mills and Horizon Milling, a Cargill-CHS joint venture. With expertise in wheat origination and logistics, CHS is a perfect fit for the joint venture.

“Ardent Mills provides a consistent demand base for our farmer-owners’ grain,” says Roger Baker, wheat merchandiser for CHS Grain Marketing. “The joint venture definitely provides value and helps create profits for our owners.”

Ardent Mills taps into the combined assets, capabilities and experience of its parent/owner companies to bring to market innovative flour- and grain-based products (like pastas), services and solutions.

And it’s taking another step forward by announcing a new organic initiative to help U.S. wheat growers double organic wheat acres by 2019.

“Ardent Mills’ vision is to be the trusted partner in nurturing our customers, consumers and communities through innovative and nutritious grain-based solutions. Our new organic initiative demonstrates one of the many ways we’re bringing that vision to life,” says Ardent Mills Chief Executive Officer Dan Dye.

“There is growing demand from restaurants and food companies for organic wheat flour. This is a significant opportunity for growers to become a part of an emerging market and to create additional value for their crops on the path to organic certification,” he explains.

Ardent Mills Vice President of Risk Management Mike Miller says, “We’re excited to work with farmers as they transition to this growing market and to provide our customers with an assured supply for product and menu introductions. We’ve heard from farmers we work with, and we understand the barriers they face when transitioning to organic production. Ardent Mills is addressing these challenges with Organic Initiative 2019.”

As farmers join the Ardent Mills organic initiative, they will have access to support services, workshops and long-term contracts for transitional and organic wheat bushels.

“Ardent Mills has been a great industry partner. We commend the company for reaching out to growers to offer new incentives to meet a growing market segment,” says Brett Blankenship, president, National Association of Wheat Growers.

“There is opportunity for premiums, and that incentive gives farmers access to an additional market and a new income stream while meeting growing consumer demand for organic wheat flour and organic foods,” he adds.

1942 Farmers Union Grain Terminal Association (CHS predecessor) begins wheat milling, acquiring Amber Milling Company, Rush City, Minn.

2001 CHS and Cargill form Horizon Milling; CHS producers are primary wheat suppliers.

2014 Ardent Mills joint venture is formed by ConAgra Mills and Horizon Milling (a Cargill-CHS joint venture)