In the current challenging period where commodity prices keep increasing, Australia’s largest co-operative CBH is seeking to exit from its long-standing partnership with Indonesia’s food conglomerate, the Salim Group in its joint-venture (JV) firm, Interflour.
Interflour owns and operates 9 flour mills spread across Indonesia, Malaysia, Vietnam and the Philippines, but has battled high grain prices eroding its profit.
CBH is controlled by about 3,500 farmers in Western Australia and there has been unrest among members with respect to the partnership with Salim Group, which also owns Indonesia’s largest instant noodle brand, as the latter frequently chose to source for cheaper wheat and barley from CBH’ competitors instead of buying directly from CBH members.
CBH is planning to sell its stake in Interflour to Salim or a 3rd party, with the process however complicated by the terms of the existing partnership.
The sale will free up capital as CBH works with agribusiness giant Cargill on plans for a large-scale oilseed-crushing plant south of Perth aimed at cashing in on growing demand for biofuels.
Interflour was established in 2005 when Salim was keen to move upstream in sourcing wheat from Australia and CBH was keen to move downstream in Southeast Asia. Interflour currently has a wheat-milling capacity of more than 6,300 tonnes a day and can supply up to 1.8 million tonnes of flour a year to the Southeast Asian market.
