New co-op pushes different angle

31 Jan, 2016 01:00 AM
Comments
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

Jock Munro
1/02/2016 5:39:13 AM

We had the best co op in the world with our grower owned and controlled well capitalised AWB Ltd. With our national pool we growers were able to leverage service providers. In the merchant controlled environment that we now operate in has left growers with little equity in the market place and few opportunities to make any difference.
Prime Hard
1/02/2016 12:13:17 PM

Not to worry Jock we all know you miss the single desk but it isn't coming back! This is a fantastic idea and vision to promote inter-generational investment and change to find a better way to move grain. I am sure the Coop will find a more efficient path to port then what is currently on offer to the growers. They are the best vehicle to pass the efficiency savings and returns back to the farm gate.
Jock Munro
1/02/2016 7:56:28 PM

Don't bet on it Prime Hard!
GFA
2/02/2016 4:42:28 AM

You are right Jock of course. It is easier to fool people than convince them they have been fooled in the first place.
Hyden
2/02/2016 4:47:21 AM

I think you are right Prime Hard. I cannot see the best coop ever coming back with Single Desk either. But that does not mean it shouldn't. It simply means our nation has gone mad. Actions to support CBH and to try and bring back co-ops to do what the AWB Single Desk did better than any other grain marketing and handling system in the world, prove that point.
boris
2/02/2016 6:52:50 AM

The totalitarians dislike producers who use the free market to their advantage. What Jock and Hyden are really saying is that I cant take responsibility for my own marketing so the government should. And because its too hard for me, my neighbor, who revels in marketing, should have his freedom to do so taken away. Then we can all be dumbed down together, which in the end is fair!
Philip Downie
2/02/2016 8:21:19 AM

Boris, the promotion of our product, responses to the market place and ability to meet those demands has never been dumber
LTF
2/02/2016 12:46:22 PM

Absolutely correct Philip Downie. Anyway you would have to be dumb to say that you were not able to make your own wheat market decisions as a farmer from 1989 onwards under AWB Single Desk. There was nothing stopping a farmer from hedging prices on his crop and/or selling to domestic buyers or exporting once the container business started in late 1990's. It is all excuses and nil reasoning from the small handful of opponents.
John Carpenter
2/02/2016 3:55:23 PM

Single desks, like the dead and buried AWB, have basically been outlawed under international trade agreements and it is inconceivable that they will ever be allowed again. For example our FTA with the US as well as the TPP would make it impossible to regenerate a single desk monopoly ever again in wheat or anything else. So this argument goes nowhere and serves no useful purpose. If growers believe the merchants are abusing excessive market power then the onus is on them to come up with ideas that would level the playing field at no cost to the taxpayer or other growers.
Deregul8
3/02/2016 9:13:38 AM

We're selling wheat Philp, not pumpkin pie. Its a market older than man himself. Wheat does not move on hype. It move on specs and price. That's why you no longer have a job at the AWB
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