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.