Evolution of deregulation

A far more worrying trend is emerging for the established bulk handlers

IT MAY have been opened up since 2008, but it appears we are finally getting a clearer picture of the deregulated Australian grains industry – where marketing businesses are becoming increasingly keen to control their own destiny through owning supply chain assets.

Previously, the conventional wisdom had followed the official line of the three major bulk handlers in that the percentage of their earnings from their storage and handling divisions were just too great to risk alienating major exporters by giving their own trading divisions preferential treatment.

Complaints from the trade regarding the performance of CBH, ABB/Viterra and GrainCorp were rife over the first three years of deregulation.

These complaints have died down of late, but instead a far more worrying trend is emerging for the established bulk handlers – their rivals are putting their money where their mouth is and establishing supply chain networks of their own.

This flies in the face of the analysis that suggests Australia has an over-supply of port capacity – the activity in terms of port development over the last three years has been unrivalled for decades.

And this is also being backed up with links to strategic upcountry facilities.

Australia’s newest player on the grains scene Agrex, a joint venture between Olam Grain Australia and Japanese giant Mitsubishi, will be complementing its stake in the Newcastle Agri Terminal (NAT) port facility with upcountry investment.

There are similar things happening in the Port Kembla port zone, while in Victoria, the Port of Melbourne is a serious rival to GrainCorp’s Geelong facility.

It is consistent with the way grain is marketed and moved overseas, where the key players have their own supply chain infrastructure.

What does it mean for growers? It’s a mixed bag, with the geographically blessed reaping most of the benefits.

If you live in an area well serviced by rail, you’re likely to benefit from increased competition, but the industry may be less inclined to participate in more isolated areas where freight costs will add up, meaning additional costs and time for farmers there in getting their grain to the market.

Changing methods of storing grain may also present opportunities.

Agrex boss David Johnson said his company would be focusing on out-turn capacity rather than storage, so it could mean more grain is stored on-farm for longer.

As with all things in the evolution of the industry, this will present both challenges and opportunities for growers.

FarmOnline
Gregor Heard

Gregor Heard

is the national grains writer for Fairfax Agricultural Media
Date: Newest first | Oldest first

READER COMMENTS

Trevor
2/07/2014 9:43:22 PM

Farmers need to remember that capital invested or spent will be paid for.Guess who pays.
A matter of opinionA selection of editorials from around the Fairfax Agricultural Media group covering the issues of the week.

COMMENTS

light grey arrow
I'm one of the people who want marijuana to be legalized, some city have been approved it but
light grey arrow
#blueysmegacarshowandcruise2019 10 years on Daniels Ute will be apart of another massive cause.
light grey arrow
Australia's live animal trade is nothing but a blood stained industry that suits those who