EASTERN State's grain business, GrainCorp, is forecasting an another upbeat profit result this year, but is worried about profit pressures hitting its all-important farmer customers.
After securing about 60 per cent of the recent winter grain harvest in its storage and marketing network the company has tipped a net profit after tax of between $165 million and $185m for 2012-13.
The forecast straddles last financial year's record $172m result.
But chairman, Don Taylor warned that despite Australian farmers being ideally placed to take advantage of the "Asian century" food boom, GrainCorp's fortunes were closely tied to the profit incentives of producers which were currently being eroded by slim margins.
Export price penalties associated with a high exchange rate would be further complicated by costs likely to be passed back to farmers when the carbon tax was introduced this year.
"Even though Australian farmers are exempt from the tax it places them at a disadvantage against all our competitors," Mr Taylor said.
"The costs that accumulate through inputs or downstream domestic processing, or along the supply chain, will inevitably be passed back to farmers while their competitors will be selling their grain in overseas markets free from this burden.
"If farmers aren't making money they will have no incentive to increase production.
"As a volume business, GrainCorp's growth and success is tightly linked to the profitability of our farmers."
Mr Taylor told last week's annual general meeting that less regulatory interference in the grain export process would help GrainCorp make grain trading and handling more competitive.
He said unlike coal or iron ore exporters, grain port operators such as GrainCorp, were required to add considerable regulatory compliance costs to their operations which eroded efficiency in a sector that was already highly competitive.
GrainCorp operates eight seaboard terminals, but utilises only about half its 15m tonnes of capacity for its own exports.
It expects its terminals will only handle a total of less than 9.8m tonnes of grain in 2011-12.
Mr Taylor said it was in his company's commercial interest to provide as much access to other exporters as possible to insure its expensive infrastructure was used efficiently.
A "light touch regulatory regime" would benefit all participants in the grain chain, he said.
Managing director, Alison Watkins said the company was attempting to beef up non-grain movements through its ports, including minerals, woodchips and fertiliser, to improve efficiency.
"We recognise harvest volumes won't always be as strong as the past two seasons, so we're looking to diversify our port capabilities to better utilise them in lower grain volume periods," Ms Watkins said.
After another big grain season (but less costly than 2010-11's weather disrupted and delayed harvest) GrainCorp has so far received almost 11m tonnes of crop and expects total deliveries to its country silos will rise towards 12.5m tonnes once the summer crop harvest winds up.
The end result will be about 1.5m to 2.5m tonnes less grain than last trading year, with quality generally better although prices for lower grade grain have been down.
A big six million tonne grain carryover left in store from last year has helped bolster warehousing and port handling earnings, with more exports than normal recorded in the company's first quarter.
"The fundamentals and underlying performance of the business are strong," Ms Watkins said.
She forecast earnings before interest, tax, depreciation and amortisation (EBITDA) in the vicinity of $350m to $380m.
GrainCorp's nine-month old grain trading office in Germany and its relatively new network of malt processing and trading assets were developing new marketing opportunities.
Although in a sluggish and economically constrained market, the malt business had lifted its EBITDA in recent months with better barley procurement and processing returns.
GrainCorp Malt's global spread of businesses and buying activities was now drawing more support from global brewers who could be supplied in multiple markets.
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