TO REMAIN relevant in a rapidly changing environment, grain marketing businesses have to have a strong focus on the future.
That is the opinion of Brad Knight, managing director of Bendigo-based grain marketing business GeoCommodities.
As part of this, he said he was constantly looking at how growers could add value to their grain marketing programs.
“I think we have got a very efficient price discovery system and that means we have probably nailed down a lot of the opportunities in the physical market,” Mr Knight said.
He nominated two areas that will need to be better exploited by Australian growers in the future; more efficient supply chains and the use of non-deliverable pricing mechanisms such as derivatives.
“With an increasing trend towards on farm storage, farmers need to continue to improve not just their physical infrastructure on farm but engage more transparently with the supply chain”
Historically many exporters have based their accumulation and export programs around grain in the bulk handling system supplemented with some on farm grain.
“If the growth of on farm storage is to continue at the current pace, some exporters programs will need to shift to a focus on ex-farm grain supplemented by grain from the system,” he said.
“I’m confident growers can physically store and manage grain well and there has been significant industry investment in this outcome.
“The other piece of the puzzle is information systems about what quality the grain is, where it is and when its available - there needs to be investment and adoption of these on farm information systems to help embed on farm grain permanently in exporters’ execution programs.
“Businesses such as GeoCommodities will play a critical role in educating growers about developments in the supply chain and driving investment in support systems for growers to enhance not just marketing but the management of grain overall”
When it comes to pricing grain, Mr Knight said there had been a couple of reasons why farmers in Australia were not big users of derivatives.
“Many people are very comfortable with their post-harvest marketing strategies when they are working with a physical product, but prior to harvest, overall, the use of hedging products is probably lower than you would expect.
“More education of farm business managers is required to enhance the uptake of these products and there seems to be a lack of real up-skilling in the last decade – not just teaching growers what the products are but really delving into how they work within the farm business and how they will impact the business.”
Mr Knight said farmers came to GeoCommodities looking for very different services.
“Some simply want services relating to market intelligence and price discovery, but others are looking for broking and a full marketing and risk management strategy.
“It all depends on the grower and what they are comfortable doing themselves.”
Mr Knight said he expected to catch up with a lot of clients at the upcoming Wimmera Machinery Field Days in March.
“It has been a pretty good year for many growers in terms of production in Victoria and southern NSW, the field days will be a good chance to catch up with people and see what worked and what didn’t in terms of grain marketing.
“There is a lot of grain about this year and some is harder to price than usual, so I also expect growers will be wanting to chat about what to do with their grain they are yet to move.”