AWB has been in the press for all the wrong reasons of late, but there has been some positive news this year with the improved performance of its bulk handling GrainFlow network.
Under the pump for underperformance as recently as a couple of years ago, GrainFlow general manager Andrew Gregor believes the business has turned a corner, with strong receivals into the four-state network this harvest.
Mr Gregor said the focus of the 22-site network had been on meeting customer needs, both grower and buyer, and creating a ‘vibrant marketplace’.
“One of the things we got from customer surveys was that growers wanted more marketing choice.
“With this in mind, we’ve gone out of our way to ensure there are as many buyers offering prices at our sites as possible.
“Obviously GrainFlow is a subsidiary of AWB, but the growers require a variety of choices, and over half the business done at GrainFlow sites is external to AWB.”
He said GrainFlow now had over 70 different buyers on its books over its network, made up of four sites in Queensland, South Australia and Victoria respectively and 10 sites in NSW, with some sites offering ten individual buyers on a given day.
“We went really hard over the year to ensure marketers were there, offering cash prices and it seems to have paid off with receivals.”
With harvest now nearly wrapped up, barring a trickle of grain into southern receival sites such as Dimboola in Victoria and Crystal Brook in SA, where weather has delayed the completion of harvest, Mr Gregor said receivals were up across the board, apart from in areas where there had been additions to the bulk handling scene.
“It’s been a pretty good year, and we are happy with our receivals, although obviously it could have been better, but for the heat in November that hit the southern zone which brought yields back.
In spite of a tough season in the north, Mr Gregor said the Queensland zone had been a good performer.
“It wasn’t a record breaking year, but it was solid enough.”
The northern NSW zone, focusing on sites at Bellata and Beanbri, near Walgett, also defied an ordinary spring to do well, while central NSW was also around expectations.
The disappointments were southern NSW and Victoria, for different reasons.
“In southern NSW there just wasn’t the grain, we’ve got a 200,000 tonne site at Oaklands, and it only took about 50,000 tonnes, the worst bit is that this is the best season in the past three years.”
He said Victoria was different, the receivals were still reasonable, but were down on what they promised at the end of October after heat and rain in November took their toll.
“The barley yields were reasonable, but wheat was down 25pc on what our estimates were prior to harvest.”
Mr Gregor said he was particularly pleased with what GrainFlow had achieved in South Australia, up against tough opposition from Viterra, which also operates the ports.
“We had a record year in SA, with the sites at Crystal Brook, Maitland, Mallala and Pinnaroo all having solid years.
“It’s a tough market for GrainFlow, given that SA is an export state, and Viterra charges $2.50/t for us to get into their ports, while we also can’t participate in some of their rail schemes, which means we are basically $5/t out of the money at all our sites.
“We’ve had to go hard to win tonnage in SA and it’s a testament to grower and buyer support that we’ve done so well.
“There certainly are difficulties in working in a semi-monopolistic state – and with its export focus, Viterra are the only ones in town with ports, so that has made it difficult, but we are seeing it come together.”
Mr Gregor said Viterra flexed its muscles in the barley market, not offering prices in SA at GrainFlow sites, which meant that the sites mainly dealt in wheat.
“They have a big presence in barley, so farmers have gone elsewhere to deliver their barley, but we’ve done well in wheat.”
He said there also has been a focus on meeting the market in terms of segregations.
“We’ve got on the front foot up in Queensland and offered an APH1 segregation for 14 per cent plus protein, and that new segregation is proving popular with both growers and marketers.”
In Victoria, there has been a focus on providing downgraded segregations, given the weather damage.
“Around 25pc of deliveries were malting, but another 15pc were off-grade malting grades, so farmers still get some sort of a premium above feed values.”
“We’ve gone to the market and asked if they can use barley of a certain grade, and they have said that they can, so we have a unique off-grade malt segregation in place.”
He said the need for a range of marketing products was clearly demonstrated by the different customer habits across the country.
“In Queensland and northern NSW we saw less than 10pc of growers conduct cash sales on the day of delivery, but that figure rose to around a third in Victoria.
“There’s a couple of reasons for this, first the cash price has improved, and second, after some tough years, perhaps there’s more of a need for cash flow, but it shows you need different products available."
Throughout NSW, Queensland and SA, around 80pc to 90pc was warehoused upon delivery.
Marketing has begun in earnest in the north, with only around 40pc of Queensland deliveries still in warehouse, but there is still 60pc left in SA, where harvest has generally only just finished.
Mr Gregor said growers transferring grain were looking at a combination of cash and pools.
“Pools remain popular, there has been a lot of grain going into various pool products again this year.”
Looking forward, Mr Gregor said GrainFlow was looking to continue to expand.
“We’re certainly optimistic about the future and have some plans, but we can’t comment on anything just as yet.”
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