GRAINCORP managing director Mark Palmquist believes the company’s new business structure, featuring a merged storage and handling and marketing division, better reflects the landscape of the Australian grains industry today.
“The whole thing comes back to achieving better prices at the farm gate,” Mr Palmquist said.
“Things have changed, we have seen a rise in on-farm storage and we see this merged unit as more agile and responsive than simply focusing on either the handling or the marketing of the grain.”
“We are looking to build efficiencies through various means, including the use of on-farm storage.”
Mr Palmquist defended the decision against claims it would provide the GrainCorp marketing business with an inside run due to its knowledge of the stocks position in various sites.
“Being able to try and get the best prices for the grain is good for everyone.”
However, whatever the business structure was, Mr Palmquist said improving the freight supply chain remained a key priority.
“We need to see more investment being made, with what we do on our facilities right through to improvements to the rail beds to allow grain to move more efficiently,” he said this week, following the company announcing a $142 million profit for the 2017 financial year.
“Better rail means we can run heavier wagons with more weight per axle, improve the velocity of the trains, so we need to see more work in this space.”
He said GrainCorp was pleased with how state government investment in rail projects in Victoria, NSW and more recently Queensland was progressing, but said more could always be done.
However, he said supply chain users were still a few years away from seeing the full benefit of the investment, both from the public purse and from GrainCorp, through its Project Regeneration capital investment spending program, which has seen upgrades to key sites throughout its receival site network.
GrainCorp has been the victim of industrial relations disputes involving its supply chain partners, such as Pacific National (PN), which provides trains to move grain to port.
Mr Palmquist estimated the strike action as a result of a dispute between PN and its train drivers cost GrainCorp $20 million.
He said many of GrainCorp’s long-term deals with freight providers started to expire through 2018-19, however he said GrainCorp did not see itself becoming directly involved in freight itself.
“We are looking to negotiate new agreements, we’d like to see rail operators work to mimic more closely the flow of crop production to ensure there are trains when there is grain about and to be less exposed in the years of low production.”
“However, I don’t think we want to get involved in rail freight on a direct basis.”
In terms of the new marketing and storage division, Mr Palmquist suggested GrainCorp had identified further opportunities in the burgeoning pulse sector.
GrainCorp has not traditionally been a major player in pulses, either as a buyer or in storing the various pulse crops, which often end up in smaller facilities.
However, Mr Palmquist said the company saw the opportunities there.
“There is a greater flow of pulses than ever before and we are also reading the reports about a 40-50 per cent growth in Australian pulse exports so it is an area we are looking at.”
His comments were backed up by Pulse Australia chairman Ron Storey.
“The journey of pulses over the past 25 years since they started to be produced to where we are today is a great success story,” Mr Storey said.
“Certainly in the north-eastern cropping zone, chickpeas are a permanent part of the rotation.”
He said last year chickpeas were the second highest crop by value in Australia.
”Chickpeas were bigger than barley last year, who would have said that in the 1990s?”
Mr Palmquist also said the high protein wheat space was another market segment GrainCorp had identified that has potential.
“There is more grain out of the Black Sea, but there continue to be blending opportunities with our top quality wheat, which is high in protein, low in moisture and has low ash content, a quality mix that hasn’t been replicated elsewhere.”