Ex­port cost drop ben­e­fits grow­ers

Countryman - - NEWS - Melissa Wil­liams

WA grain grow­ers are ben­e­fit­ing from lower costs across the ex­port sup­ply chain in this State, ac­cord­ing to a lead­ing in­dus­try re­port re­leased last week.

It shows charges for grain ex­ports through all WA ports since 2012-13 have dropped by up to 4.2 per cent (Kwinana) and re­bates of more than $10 per tonne from CBH Group in 2016 and 2017 have fur­ther re­duced han­dling and lo­gis­tics costs. Freight charges are also down by about 3.5 per cent from lev­els of six years ago.

The re­port, Aus­tralia’s grain sup­ply chains: costs, risks and op­por­tu­ni­ties, was com­piled by the Aus­tralian Ex­port Grains In­no­va­tion Cen­tre and found grain sup­ply chain costs to users na­tion­ally had fallen slightly or re­mained sta­ble since its pre­vi­ous anal­y­sis in 2014.

AEGIC chief econ­o­mist and re­port au­thor Ross King­well said WA’s sys­tems were per­form­ing well for grow­ers, but the State needed to be vig­i­lant in con­tin­u­ing to make cost sav­ings and im­prove ef­fi­cien­cies to re­main glob­ally com­pet­i­tive.

“WA has ex­pe­ri­enced lower ex­port charges, high re­bates and slightly lower freight costs than other States and has been blessed with big­ger crops in re­cent years,” he said.

“The State has pushed more grain through its han­dling sys­tem and ports and this has driven costs per unit of grain pro­duced down.

“Grow­ers are also ben­e­fit­ing from cost-cut­ting by CBH Group and its in­vest­ments in strate­gic up-coun­try re­ceival points that have boosted ef­fi­cien­cies in un­load­ing and han­dling. That is a key ben­e­fit of hav­ing only one ma­jor bulk han­dling provider.”

Pro­fes­sor King­well said the big­gest chal­lenge for WA was its re­liance on ex­port­ing grain, hav­ing only a small do­mes­tic mar­ket.

He said this in­creased ex­po­sure to com­pe­ti­tion with lower-cost ex­port­ing na­tions such as Rus­sia, Ar­gentina, Ukraine and, to a lesser ex­tent, North Amer­ica.

“The costs in grain sup­ply chains are high in com­par­i­son to most of our com­peti­tors and con­sis­tently make up about 30-35 per cent of the to­tal costs of grain pro­duc­tion,” he said. “While that is sim­i­lar to our com­peti­tor coun­tries, those coun­tries typ­i­cally ben­e­fit from hav­ing lower labour costs and bet­ter economies of scale. Those coun­tries are also mak­ing sig­nif­i­cant in­vest­ments to fur­ther chal­lenge Aus­tralia’s com­pet­i­tive­ness.”

Pro­fes­sor King­well said to stay in touch in a global mar­ket, key re­forms in the ex­port sup­ply chain were needed in WA and na­tion­ally.

In this State, he said there was a need for low-cost grain path­ways, in­clud­ing road plan­ning, and plans to deal with po­ten­tial fu­ture con­flicts with ur­ban de­vel­op­ment, es­pe­cially around the Kwinana, Al­bany and Ger­ald­ton ports.

He said pro­duc­tion and ex­port sys­tems for dif­fer­en­ti­ated and seg­mented grain needed con­tin­ued sup­port from the whole sup­ply chain to en­able WA to con­tinue cap­tur­ing price pre­mi­ums and meet cus­tomer re­quire­ments.

“WA is al­ready the only State to ex­port noo­dle wheat, pre­dom­i­nantly to Ja­pan and Korea, and non-GM canola, for which grow­ers reap a pre­mium price,” he said.

The AEGIC re­port iden­ti­fied a need for sup­ply chain play­ers to re­ceive fur­ther in­cen­tives to in­vest in im­prove­ments.

“This could come from in­no­va­tions in driverless chaser bins,” Pro­fes­sor King­well said.

“Or it could be au­ton­o­mous grain cartage from up-coun­try bunkers to rail load­ing fa­cil­i­ties.”

Pic­ture: AEGIC

AEGIC chief econ­o­mist and re­port au­thor Pro­fes­sor Ross King­well, cen­tre, with Dr Chris Carter and Dr Peter White.

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.