Western Australia’s grain industry is dominated by one operator, the Cooperative Bulk Handling (CBH) group, but that could change as farmers seek alternative means of exporting, effectively bypassing the state’s main bulk handler this harvest.
A bulk shipment of grain being exported out of Albany port early next year is the result of a new partnership between family-owned Commodity Ag and Victoria-based grain trader Flexi Grain.
Industry sources said Plum Grove logistics had also received approval to export a bulk grain shipment of around 10,000 tonnes from Geraldton port early next year.
Direct bulk export players
More than 90 per cent of WA grain is received and exported in bulk by CBH through its Geraldton, Kwinana, Albany, and Esperance port facilities.
The export market is particularly valuable for WA growers, who are generally able to sell grain at a higher price than farmers in the east.
Similar attempts to bypass CBH in WA’s export space have been made in the past, but market analyst and director of Episode 3 Andrew Whitelaw said there was a reason why many large-scale international commodity traders had not invested much in port infrastructure in WA.
“That’s because of the incumbent CBH. For lack of a better word, it is a monopoly,” Mr Whitelaw said.
“CBH is owned by the growers. The phrase is ‘for the growers’, and it’s a co-op, so it has the ability to do things that, quite frankly, private enterprises wouldn’t be able to do.
“These [companies] are going to be competing against an organisation which has some of the best infrastructure and some of the cheapest infrastructure in the world.”
CBH is investing millions each year to increase the capacity of their grain receival sites. (ABC News: Andrew Chounding)
Flexi Grain’s collaborative export program is the latest of several developments from grain traders to directly export grain without using the infrastructure and services of CBH.
Logistically, it would require significant on-farm storage as growers would have to hold onto their grain until it was ready to be exported, which can sometimes take up to a year.
Flexi Grain senior trader Sam Roache said their program would be attractive to farmers who want more flexibility and control over their grain in the supply chain.
“It adds additional capacity to the port zone, which means the farmer has more options in terms of who they market to when they market, and to which markets they’ll sell,” he said.
Though it was too early to confirm an exact volume, at least 35,000 tonnes of wheat is expected to be loaded onto a bulk carrier and exported early next year.
More choice for farmers
For the last decade global agribusiness Bunge has operated a port terminal in Bunbury.
It now has storage facilities in Arthur River and Kukerin, which offers an alternative for farmers in the state’s southern wheatbelt region to store their grain until it is sold.
Lake Grace grower Ed Naisbett farms in an area where both CBH and Bunge have storage facilities, meaning each year he was able to secure the most competitive prices for grain by shopping around.
Lake Grace farmer Ed Naisbitt grows wheat, barley, and legume crops like lupins. (ABC Great Southern: Georgia Hargreaves)
“Bunge keeps CBH on their toes and probably a little bit the other way round,” he said.
“Competition is always a good thing, it brings about improvement.
“A dollar here and a dollar there makes a huge difference for us.”
WA grain production on the up
According to the latest Grain Industry Association of WA crop report, this year’s harvest is expected to be 18.6 million tonnes, making it the third-largest grain crop on record.
As some farmers reduce their flock size to transition away from the live export of sheep, market analyst Andrew Whitelaw said the Albany port zone, in particular, was likely to see an increase in cropping in the future.
This year is on track to be the third largest harvest on record in Western Australia. (ABC Great Southern: Georgia Hargreaves)
“We could potentially see two to four million tonnes of additional crop into the Western Australian system just from the lack of sheep,” he said.
“Never mind agronomic advances and other technological advances.”
Expansion plans underway
Mr Whitelaw said even if companies like Flexi Grain gained more traction in the state, and resulted in less grain in the CBH system, it would be barely noticeable for the co-op — compared to what WA is expected to produce and export in the future.
The cooperative has committed to investing between $350 and $450 million annually to expand its operations and capacity to account for the increasing volume of grain being produced in WA.
CBH says it’s working towards to reaching a monthly export capacity of 3 million tonnes by 2033 or sooner. (ABC Rural: Kit Mochan)
CBH chief operations officer Mick Daw said the company was aware of the new export competitors but was focused on ensuring the efficiency of its network and supply chain.
“Fundamentally, we believe that there is competition within the supply chain we run, and that’s how we maximise value,” he said.
“It was well talked about, or well published, two years ago when we were short on capacity, and that’s really where we’ve been spending all our energy and time to lift that up.
“There’s bigger crops that we keep seeing year in, year out and it’s definitely giving us more and more confidence that that’s what we need to focus on and why it’s important that we get that working in the most efficient way.”
CBH said it was working towards to reaching a monthly export capacity of three million tonnes by 2033 or sooner.
