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Overcapacity means there are grain supply chain deals to be done

Jan 14, 2016 at 06:47 AM CST


As Australia's grain storage capacity exceeds supply, growers now have the opportunity to take the upper hand and get a better deal from their grain services providers.

Since the industry's deregulation, there are more exporters in the Australian grains market and more storage and handling providers.

Bulk operators have streamlined their operations, closing smaller receival sites and creating larger sites.

Grains analyst Graydon Chong, from Rabobank, said companies are now competing for volume because of the increase in storage facilities.

"The average Australian harvest is around the 30-40 million tonne," Mr Chong said.

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"In just the centralised storage system we have over 50 million tonnes of commercial grain storage.

He said grain handlers will need to offer a more collaborative service along the supply chain if they are to remain competitive.

"Partnerships in the supply chain are going to be crucial, so value-type partnerships where longer term agreements can be struck.

"When asset utilisation becomes so important, offering either a premium for grain prices or discounts for storage could certainly be on the table," Mr Chong said.

Broadbent Grain's Mick Wilson oversees the company's latest venture at Moree, in the heart of the northern wheat belt.

Broadbent Grain took over the operations of the grain receival site in late 2014 and has since increased the site's capacity.

"We built new bunkers specifically for the [recent] harvest," Mr Wilson said.

"These two bunkers can hold about 100,000 tonne all up.

"If we build silos we could get up to 200,000 tonne storage capacity."