GRAINCORP managing director Mark Palmquist is the first to admit his company does not fully understand how the phenomenon of on-farm storage (OFS) of grain will progress.
However, he is confident it is here to stay and says initiatives such as GrainCorp’s new FarmDirect service will help the company take advantage of any opportunities OFS presents.
FarmDirect was unrolled after this season’s harvest as a trial program in GrainCorp’s southern zone and allowed farmers to deliver into the system after harvest.
Mr Palmquist said the program allowed more strategic use of GrainCorp’s bulk handling assets, rather than causing strain on the system with all deliveries occurring at harvest time.
The hook for growers to participate has been access to buyers offering bids in the GrainCorp system, a big plus this year with the focus on export, as opposed to domestic sales due to the large domestic surplus.
Growers were also allowed a relatively high tolerance for insects which GrainCorp will then manage as part of the deal.
However, Mr Palmquist said there would also be seasons where the domestic market was the focus.
“We have to ensure we have a good product all round to ensure we win post- harvest tonnage in years where there are strong domestic market opportunities.”
He said grain storage management was one area where GrainCorp had a strong skillset.
“We can offer our infestation management skills to growers and I think that might be something they would like if they decide they want to hold grain longer than they initially thought.”
He also said it would be possible to manage grain that has degraded in its time in OFS.
“We have to expect there will be quality degradation in some grain that has been stored on-farm and that grain storage insect infestation rates will be higher, but we believe we will be able to create a path to market regardless of the quality of the grain.
“It’s something we are going to have to do if we want to create the opportunities to handle the grain.”
Logistically, he said the Project Regeneration upgrading of key sites had also been designed with post-harvest deliveries in mind.
“There will be fundamental changes in the way grain is delivered in the future and we’re making sure we configure our network to take advantage of post-harvest deliveries.”
In the short term, he said he expected a further flush of grain to hit the market.
“We believe there are large volumes still in OFS and that may reach a point later in the year where the farmer wants to clear his storage out and the stocks will be released.”
He said there was an estimated 2.5 million tonnes of grain in GrainCorp’s catchment alone stored in grain bags this year.
Grain bags are generally regarded as a relatively short term OFS solution.
“The sector is something that is still developing and we will learn as we go along, but it is a space we see being important in the future.”