GRAINCORP bosses are surprisingly upbeat about the likelihood of getting government financial backing for rail infrastructure upgrades at key silo sites across its eastern Australian network.
Chairman Don Taylor told last week's annual general meeting there were positive signs governments would "find ways" to work with GrainCorp's infrastructure improvement agenda - the single largest investment in rail loading capability in the company's history.
New managing director Mark Palmquist also noted there seemed to be "pretty good confidence about the awareness that something has to be done" with the nation's dilapidated country rail network.
The big bulk handling and marketing business is midway through closing more than 100 sites in NSW, Victoria and Queensland and creating receival cluster areas based on key depots where it will spend $200 million in a three-year period to boost storage and rail logistics efficiencies.
GrainCorp expects to triple its rail loading rates to average more than 500 tonnes an hour, estimating the rail export efficiency lift could be worth an extra $5/t in returns to growers.
That would translate to about $90m for its farmer customers.
Its Project Regeneration improvements aimed to cut GrainCorp's road freight task by a million tonnes annually by diverting grain to railway lines, while also reducing the rural community's road maintenance costs and road safety concerns.
However, at more than half of the 60 key grain sites being upgraded, rail siding track extensions and improvements are badly needed so loading and unloading operations can accommodate today's longer grain trains.
"Government-owned rail sidings are a major source of inefficiency because they cannot currently hold a full unit train for loading," Mr Taylor said.
Benefits from the silo upgrades could not be delivered in full without governments chipping in $50m to $75m to improve the outdated rail network, particularly at country silo sites.
"We will continue to encourage governments to play their part in delivering for the industry and for out regional communities," he said.
Given the productivity benefits available, and that the public rail improvement spending required was considered by the freight industry as relatively reasonable, Mr Taylor believed it was reasonable to expect government support for GrainCorp's initiative.
Although he had not been offered "a bag of money yet" he felt there was serious government understanding about the need for a special funding commitment.
Challenging year ahead
Possibly a bigger challenge facing the company in the year ahead was its low grain intake after another drought-squeezed year and market competition which Mr Taylor said had never been more intense.
GrainCorp's core storage and logistics business earnings are highly
sensitive to grain receival trends, which last year fell 23pc to 8m tonnes, with exports down almost 50pc to 4.4m tonnes.
Current harvest receivals totalled 6.4m tonnes last week, with much of the winter harvest now finished and prospects for a summer crop intake looking limited.
"It will again be a challenging year in the next 12 months," Mr Taylor said.
Mr Palmquist confirmed there was "no question the 2014-15 year's receivals and exports will be down" and the company had to look at places where revenues could be grown to make up for the shortfall.
GrainCorp's recent diversification into edible oils had good potential to expand and its international malt division was "in pretty good shape" with disciplined savings and energy, water and labour efficiencies assisting its bottom line returns.
The malt business was also working hard to maintain its strong relationships in the niche craft beer and whisky distilling markets.
The company would also generally benefit from the lower the Australian dollar and potential growth in barley exports to China in the wake of free trade negotiations.
Increasing market competition in eastern Australia and drought contributed to GrainCorp's 64pc net profit slump $50.3m last year.