As part of its 10-year weather volatility insurance contract with White Rock, GrainCorp might have to pay up to $70 million to cover losses in the three drought-stricken east coast states that make up its footprint.
GrainCorp confirmed it could be liable for $70 million under the Crop Production Contract, based on current Australia Bureau of Agricultural and Resource Economics (ABARES) production estimates for its three east coast states. However, the firm’s managing director is not concerned about the potentially hefty payment.
“That fact we’ve triggered the payments is a good thing,” said GrainCorp managing director Robert Spurway in the company's full year 2020 financial results briefing, as reported by Farm Weekly.
“If production is this high, then we are moving well and truly into requiring an export task, and we will make more than enough to cover the cost of the payment. We got a payout of $58 million in FY20, which was very helpful in allowing us to manage the drought.”
Spurway added that he was confident that GrainCorp's storages were performing well.
“We received an email the other day from a farmer in northern NSW where there is a substantial volume of grain to move, congratulating us on how our sites were operating given the big tonnages coming in,” he continued.
“One email does not make a trend, but we're confident we will be able to attract good amounts of grain as harvest continues.”
