Australian Grains: De-bulking in the Pursuit of Global Competitiveness

Increased alternative options to grain exports, such as direct loading at the port, more containerised grain exports, and newer bulk terminal export capacity, together with increased on-farm storage are all part of the capital shift in the Australian grains industry. There is a shift of capital out of bulk-handling to farms and to more flexible capital arrangements, which will challenge the cost structure of traditional bulk-grain networks over the next five to ten years.

Report Summary

To achieve efficiencies and preserve the competitiveness of Australian grain in global markets, Australian bulk grain-handling networks have undergone varying degrees of rationalisation. Against this background, Australian grain-farming businesses have faced, and continue to face, the decision to pursue improved profitability via higher-value grain sales (requiring segregated supply chains), or via increased yields and higher volumes (best delivered to markets via highly efficient bulk-handling networks).

Under both of these alternatives, grain-farm businesses need to invest in order to participate profitably in the future Australian grains industry. Investment will be required to either a) expand or upgrade farming operations to be profitable in a high-volume, low-margin international grain market, or b) increase on-farm storage and value-adding capability in the development of grain supply chains that respond to higher-value end markets. Notwithstanding the decisions to be made, the delivery of quality and functional Australian grains will become increasingly more disaggregated over the next five to ten years.

The extent to which this occurs will depend on how bulk-handling network rationalisation is managed in the future, and how innovative the forging is of new storage and supply chains solutions between growers, marketers, and bulk handlers. The challenge to bulk-handling networks will be most pronounced in southern and eastern Australia, due to the already-developing boxed grain export market, domestic market options and incumbent competition in the marketplace. The impact will, however, be evident across Australia and along the supply chain, also altering the role for grain accumulators, marketers, and industry functions.