I WOULD like to acknowledge the unsung heroes in the grain industry.
When grain trades, contracts must be exchanged, the physical title of grain changes hands from the seller to the buyer, and payment is made from buyer to seller.
This sounds relatively obvious and simple however there is quite a bit involved, and likely more complexity than there needs to be.
When accumulating grain, buyers are often operating within trading limits yet trying to purchase tonnage via various channels.
This means real-time information on their current position is becoming more important and yet can be difficult.
Every tonne of grain sold has related Federal and State-based statutory levies, end point royalties, and other costs connected with grain storage and handling.
Transfer of grain title can take a number of forms.
If the grain is being delivered directly to the buyer, grain title is transferred when the grain is unloaded from truck and the seller should receive paperwork confirming delivery of tonnage and quality.
If grain is stored in a warehouse facility, many bulk handlers will have an online system whereby the seller can transfer grain to the buyer.
Others require the seller to request the bulk handler to transfer title of their grain to the buyer.
To successfully complete a trade accurately and on time, requires people to cross check invoices, liaise with other organisations, and login to bulk handler websites to check tonnages and enter applicable transfers.
These are the unsung heroes and without them the grain industry stops.
The more grain your organisation trades, the larger the team of people required to successfully complete trades.
This is the reality given the manual nature of most of these processes.
Further, the requirement for people to action most of these processes opens the possibility of human error.
Simple examples of this are entering incorrect tonnages when transferring grain or selecting the incorrect grade etc.
The result is inefficiency that creates extra cost and risk of mistakes across the grain industry and can be improved.
Many people associate counterparty risk in a grain transaction as the risk of non-payment against the contract.
However, the risk of non-delivery against the contract is an equal risk, and the ability for counterparties to make errors increases this risk.
So, what can be done to improve the process of completing grain trades?
At Clear Grain Exchange we invest heavily in technology to assist the cross-checking and audit processes associated with creating and settling trades.
This enables us to run a relatively efficient back-office team that more of the industry are seeing benefit in and utilising.
The next step is for companies across the grain industry to be open to better technical integrations with each other.
This can allow more efficient and accurate flow of information between companies involved in a grain transaction such as buyers, sellers, agents and bulk handling companies.
I sit on Grain Trade Australia's relatively newly formed Information and Technology Advisory Committee.
An objective of that committee is to construct a roadmap that identifies the major constraints in the industry that are likely to require change in the medium to long term.
One of the projects identified is to develop a set of standardised data tables that provide codes for industry to better map parameters such as sites, ports, commodities, grades, bulk handling companies etc.
Essentially it will help the software between two organisations to talk to each other.
The technology, know-how and security exist to develop better real-time integrations between the back-office systems of companies involved in Australian grain.
We just need to get on with doing it which may require a shift in mind-set for some in the grain industry.
Rest assured the return will far out way the relatively modest investment required to develop a more technically connected Australian grain industry.