World Grain - August 2005 - 59

FEATURE: GRAINFARMERS: FOCUSING ON THE CUSTOMER

single call for all of their mills. To meet
the rationalization of the supply base,
we felt we had to be national."
SHORTENING THE CHAIN
Grainfarmers believes it has led the
way in shortening the chain between the
farmer and the end user, particular by
forming specific supplier clubs linked
to an end user. "We recently arranged a
partnership with Ranks to sell them one
million tonnes of wheat over a four-year
period," Pollock said, pointing out that
it was the largest single sale of grain in
U.K. history.
"We wanted to select farmers for that
club," he said. "They had to be local to
the mills and producing consistently
good quality. They had to have the right
storage. We are encouraging those
growers to grow the varieties and specifications that Ranks wants. There's no
doubt there are significant benefits for
Ranks and for the growers."
The miller gets consistency of supply and lower haulage costs benefit
both sides.
"Increasingly, flour millers are specialized," he said. "Increasingly, many
mills want specific varieties and specifications. We publish a market focused

"Roughly three-quarters of
all the grain we handle is used
in the domestic market, with
a quarter exported. We try to
keep that balance."
- Tim Pollock, Grainfarmers'
group managing director

Seed Selector to help the farmers pick
the right types for their farm and regional market."
Grainfarmers formed a similar
club to supply Coors, now the largest brewer in the U.K. "They did a
rationalization exercise and selected
two suppliers - Cargill/Frontier and
www.World-Grain.com / World Grain / August 2005

Grainfarmers' trading room, always buzzing with activity, is a place where farmers receive a wide
range of trading options. Photo by Tim Scrivener.

Grainfarmers," he said.
Grain buyers face significant added
costs from factors like improved quality
control, food safety requirements and
HACCP systems. "As far as the customers are concerned, it's easier to come to
a big supplier like us rather than audit 30
or 40 small players," he said
The industry has gone through a major rationalization. "Our market share
went from a regional 3% in 1998 to
20% in 2004," he said. "Soufflet exited
the U.K. and sold its U.K. business to
Centaur. Cargill merged with Banks
and then that merged with Allied Grain.
Centaur is currently proposing to merge
with Fengrain.
"We probably led the consolidation
within the industry," Pollock said, adding that he expected the trend to continue. "We'll probably see a market where
four or five big players have a share of
90%, with a few niche businesses taking the rest."
Grainfarmers could not get much
bigger. "Above 25% you run into OFT
(Office of Fair Trading) problems," he
said. "That leaves farmers with plenty
of choice."

A U.K. COMPANY
One big difference between Grainfarmers and its main competitors
is that it is purely a U.K. company.
"We have no aspirations to become a
marketer of grain in other European
countries," he said. "We don't see any
benefit for shareholders in becoming a
multinational (company). We are the
preferred supplier by volume to many
of the U.K.'s businesses. We work hard
on meeting their needs."
A marketing alliance formed in 2002
with Louis Dreyfus gives the company
access to international market muscle.
"It enables us to access worldwide
market intelligence and gives us access
to the major import markets," he said.
French-based family-owned Louis
Dreyfus is the world's second largest grain shipper after Cargill. "The
alliance has been very successful,"
he said. "It's opened up markets. For
example, we were the first to ship
U.K. wheat to the U.S., and last year
we shipped biscuit wheat to South
Africa." The partnership handled more
than one million tonnes of exports
over the last two years, or over 25% of
59

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World Grain - August 2005

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