Emerald cuts jobs, builds digital

18 Mar, 2015 01:00 AM
Emerald Grain managing director John Murray said the restructure mainly impacted the grain origination business.
We have made some difficult but important changes in order to control costs
Emerald Grain managing director John Murray said the restructure mainly impacted the grain origination business.

EMERALD Grain has cut jobs, primarily in its regional origination arms, and will close offices as part of a company restructure.

Overall, 27 jobs have been lost at the business, which has expanded rapidly since starting in 2004, leaving a total of 145 employees.

Emerald Grain managing director John Murray said the restructure mainly impacted the grain origination business, with the company continuing to invest in its infrastructure arm.

“We have made some difficult but important changes in order to control costs,” Mr Murray said.

As part of this, an office in Albany, Western Australia, will be closed, along with the merger of Emerald’s two South Australian businesses Sturt Grain and EP Grain. South Australian origination will now be centred in Adelaide.

It marks a change in direction for the company which initially made its name in grain origination due to its strong upcountry network, thanks to its involvement in farmer co-operatives such as SQP in Victoria and Southern Ag Grain in NSW.

Mr Murray said increasing use of technology by growers for price discovery was partially responsible for the change in business model.

“We’ve seen grower’s use of digital sources for price discovery increase significantly over the past two years in particular.

“With this, we’ve decided to invest heavily in our digital platform, and we’ll still be able to provide a good service to growers, they’ll still have the ability to talk to people on the phone, there may just be a little less face to face contact.

“At the end of the day, price is king, and it will be competitive prices that win business from growers.”

He said he did not feel the downsizing would cost the business in terms of winning grain.

“In WA for example, even after the job losses, it only brings us back to levels of staffing similar to all the other major players except CBH.”

After issues with its pools underperforming, Mr Murray said Emerald had not offered pools for the past two years and would keep focusing on its cash pricing options in terms of its origination business.

Mr Murray conceded goals made by Emerald a couple of years ago to try and account for 25 per cent of the grain in Australia may be ambitious in the short term at least.

“It is still possible that we could do it, but at present we have a market share of 8-10pc and perhaps growth projections are slower than what I thought a year ago."

The restructure sees Emerald continue to push down its infrastructure path.

Along with the Port of Melbourne and a 1.5 million tonne upcountry storage network across NSW and Victoria, Emerald has also recently invested in a joint venture to build a new grain loading terminal at Port Kembla, NSW.

“As the post-deregulation grain market has evolved, it’s clear that to buy grain, move grain, trade grain and do so profitably, you need some control over the supply chain,” Mr Murray said of the decision to focus on investment in infrastructure.

Along with the Quattro investment at Port Kembla, Emerald is also investing in more storage upcountry and in $3 million upgrade to its container facility at the port of Melbourne.

Mr Murray said he would like to see the company’s earnings split more evenly between infrastructure and marketing.

“At present there is an imbalance, which is easy to diagnose, we are buying grain all over Australia and only have a supply chain in south-eastern Australia.

“Down the track we’d like to see those earnings figures draw closer together, we’d like to see a larger geographic spread in the supply chain.”

However, he said the focus would remain on getting improvements in south-eastern Australia along with the Quattro deal at Port Kembla bedded down before considering further expansion.

“The reality is, you need a port, and in SA and WA we have some very strong incumbents in Viterra and CBH.”

The majority of the job losses are in Victoria in the company’s administration and accounting departments.

Gregor Heard

Gregor Heard

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


18/03/2015 5:06:45 PM

Could it be that less farmers are willing to give away their grain to Emerald after the traders recent pool fiascos


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