Grain Logistics Taskforce Report - Department of Transport

5.0 Supply chain analysisThere are a wide range of issues affecting graintransport. These range from harvester capacity,on and off farm storage, grain testing procedures,availability of trains and trucks, capacity of rail androad networks and ship inspections. The changes tothe grain industry through privatisation and abolitionof the ‘single desk’ have required major adjustmentswhich the industry is addressing.There are more than 550 off-farm storage sites nationallywith a capacity of 50 million tonnes. On-farm storagecomprises about 16 million tonnes of capacity 14 . InVictoria, there are approximately 150 off-farm grainsilos located in the main production areas with a storagecapacity of around eight million tonnes, about 70%of which is controlled by GrainCorp 15 . On-farm grainstorage is about three million tonnes.14South Australian House of Assembly, Interim Report of theSelect Committee on the Grain Handling Industry 2011, p375.1 On-farm storageFarms are increasingly producinglarger and more consistent yieldsdue to improved grain quality,economies of scale in productionand drought resistant crops andfarming practices.Better farm yields combined withmore effi cient headers, which canharvest 35 tonnes of grain per hourcompared with 8 tonnes per hourtwenty years ago, has added topressure on grain storage capacity.Farmers have an incentive to harvesttheir crops as quickly as possible inorder to reduce the potential impactof any adverse weather conditions.Higher farm yields, combined withincreased grain marketing optionsto farmers and the slow receivalcapability of some off-farm silos,has led to increased on-farmstorage. This enables farmersto take advantage of spot pricingopportunities provided by marketersin either the domestic or exportmarkets – grain can be storedon-farm and sold for a higherprice later on.Grain stored on-farm is transportedby truck for either domestic orexport purposes. If it is exported,the marketer can arrange for it tobe delivered to a silo for transportby rail to port or trucked directfrom farm to port.5.2 Grain co-operativesA recent adjunct to on-farm storageis the development of local grainco-operatives. These are grainstorage facilities developed bylocal farmers to augment grainstorage facilities provided by majorcompanies, but at less cost. Forexample, a co-operative storagefacility at Boort in central Victoria has60,000 tonnes of shared capacity. 16Similar storage facilities have beenbuilt at Werneth, north-west ofGeelong, Berriwillock in north-westVictoria and at Moulamein in southwestNSW.The co-operatives provide farmersmore control over their grain andreduce their storage and handlingcosts. Instead of growers investingin their own on-farm storage, theycan pool their resources and investin a bigger, shared facility at lesscost per grower. These facilities alsoincrease grain growers’ ability tomarket their grain by pooling theirresources – instead of a marketerbuying 20,000 tonnes of grain fromtwenty different growers, they cansource the same amount of grainfrom a co-operative and deal witha single transaction.However, the location of these newfacilities is not conducive to railtransport as they are located whereland is available which may notbe near a railway line. This furthercontributes to use of trucks for graintransport. Local governments shouldwork closely with these co-operativesto ensure they are planned and sitedwith easy access to rail sidings fortransport by rail in bulk or containers.15Victorian Department of Primary Industries, op cit, p216Loddon Times, 16/11/1114 Grain Logistics Taskforce Report