New co-op pushes different angle

31 Jan, 2016 01:00 AM
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19
 

LESS will be more according to a newly formed farmer cooperative in northern NSW pushing for lower supply chain costs.

Grower Co has been formed to drive down freight rates from the Moree area into export facilities in Newcastle.

And rather than inviting more industry players in to increase competition, as has been the case with other grass roots cooperatives successful in other states, Grower Co wants to see a streamlining of the supply chain.

“We think the best way to cut costs is to create efficiencies by getting more grain into fewer sites and using one set of supply chain infrastructure,” said Grower Co spokesman Tim Grellman.

Mr Grellman, who farms west of Moree, said the group was formed in October by five foundation members, who are now pushing to get more members.

He said the group’s plan was to work with one supply chain owner to create economies of scale.

“The local market here is fragmented, with an over capacity of storage and multiple marketers competing for grain.

“That means we have smaller trains and that in turn leads to higher costs.

He used the example of Western Australia, with a more consolidated bulk handling and transport system as how costs could come down should the co-op be successful.

Grower Co have been advised by former CBH grain operations manager Max Johnson, who was instrumental in CBH's 2014 bid to enter the NSW market before it was canned.

Mr Johnson left the co-operative to form new venture Global Supply Chain Consultancy with another former CBH stalwart, Colin Tutt.

Mr Grellman said the fragmented local market meant growers exporting grain were hit with higher costs than their WA counterparts.

He said it could cost him about $47/t in freight to send grain from Moree to Newcastle, while it would cost WA growers about $25/t freight over a similar distance.

"Obviously it can be done, so why don't we do it over here?" he said.

"If we can reduce that cost by 20-40pc that is a big saving to growers.

"That's what our selling point is, it's very simple, but what we need to do is get a lot of grower members to be able to do that otherwise it's not going to work."

Grower Co membership comes at a cost of $2000 and entitles the member to 2000 shares in the co-operative.

Mr Grellman said the co-op had the sole focus of cutting supply chain costs.

“We won’t be marketing or buying grain.”

While northern NSW services a strong domestic market, Mr Grellman said an efficient path to export markets was required.

“The domestic market takes its lead from the export market, so if we can boost returns to growers from export sales that will be beneficial to all growers, whether they are selling for export or not.”

He said at this stage Newcastle Agri Terminal (NAT) would be the preferred port, due to having better infrastructure than its competitor – GrainCorp’s Carrington facility, but added this was yet to be confirmed.

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READER COMMENTS

Philip Downie
3/02/2016 9:14:03 AM

JC both the TPP and the US FTA have or will cost Australia dearly, hardly the way to go. In fact if we had any independence we would tear up both. AWB did not cost the taxpayer anything and made money for growers (here come the shrill "we couldn't do what we wanted" mob)
Jock Munro
3/02/2016 10:50:09 AM

Exactly dereg and we had a reputation that was second to none because we delivered a quality product- it is the merchants that undermine the specs.
Philip Downie
3/02/2016 12:30:04 PM

To traders it may as well be pumpkin pie. We definitely sold on specs we made sure the marketers told the customer exactly what they were getting not what they might get. You make it sound like I was dismissed, nothing further from the truth.
LTF
4/02/2016 6:59:38 AM

The wheat Industry in Australia became the model of which all other sectors became more and more envious the longer the single desk was in place until the smarties got greedy and started to break it down from about the 1990's. For the prior 50+ years, the number of farms focussing on wheat grew dramatically and it became the favoured route for farm security and prosperity. Since the smarties got their way, farm family numbers have declined dramatically. We also now see foreign interests getting a choke hold on the industry because of greed and stupidity. Say no more.
Deregul8
5/02/2016 11:45:02 AM

LTF that is a load of codswallop. Under the watchful eye of the AWB, wheat grower numbers in WA went from over 10,000 to around 6,000. Now under the watchful eye of CBH grower numbers in WA are now down around 4100 and still declining.
Peter Blacket
6/02/2016 8:19:11 AM

Im pro deregulation bought many benefits to my operation. Basically haven't pooled grain since about 81 but not going to get into a pro and con argument. But my question is why doesn't wacbh have another go at entering nsw seems logical and I think would be welcomed by nsw growers and add to cbh bottom line. I was vocal in retaining ausbulk co-op here in SA but a lone voice at times despite the fact im in favour of deregulation storage is different than marketing. cbh try to do both maybe that's why many are against wacbh.
John Carpenter
6/02/2016 8:51:11 AM

That may be the case PD but neither side of politics is ever going to tear up the FTA's particularly with the US.
LTF
10/02/2016 5:20:31 AM

Once again D8 you are wrong. You did not read properly. The decline in grower numbers happened from the 1990's onward after the smarties (like you) had already changed the AWB into its Trader structure. From that point it was doomed as were the growers who then left the industry in droves just like they continued to do ever since. Even with the same level of production the industry is unable to support the 50,000 growers it did in the Australian Wheat Board hay days. What are we down to now - 15,000?
Merchant
29/02/2016 8:35:45 AM

Is the mission statement of this Co-op going to be based around boosting the returns to the farm gate? Lots of Co-ops have imploded with the same mission statement.
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