Infrastructure: the grain thing

Over the past fortnight, Bunge has officially opened its Bunbury, Western Australia, port, while powerful American co-operative CHS has made its largest investment in storage, buying an east coast grain storage and packing business.

Japanese agribusiness Sumitomo, through its Australian company Emerald Grain, has purchased successful storage business Ardlink, located at Ardlethan in the northern Riverina.

The purchase means the company now has 16 storages on the east coast, along with the Port of Melbourne. This ranks second for GrainCorp's rivals, with AWB's GrainFlow having 18 sites.

Emerald has said it will spend $3 million in upgrades on the Ardlethan site and lift its capacity to 120,000 tonnes.

Meanwhile CHS has bought a 50 per cent share in Broadbent Grain, which operates in both Queensland and Victoria, with a storage and packing facility at Toowoomba and a 200,000 tonne storage site at Lakaput, in the heart of the emerging grain production zone in Victoria's western district.

Broadbent Grain principal Steve Broadbent said the investment would be mutually beneficial.

"We've built up a good business over the years and this investment from CHS will mean more opportunities for both of us."

He said the name of the business would remain Broadbent Grain.

Meanwhile, in WA, Bunge has officially launched its Bunbury port facility, which will compete against the major bulk handler and port operator in the west, CBH.

Supply chain specialist Luke Fraser said the recent spate of infrastructure investment from multinationals indicated a desire to control their own destiny.

"They are keen to get involved in the supply chain and have their own networks rather than relying on the traditional bulk handlers to move their grain."

Mr Fraser said the industry was in another period of change following deregulation of the wheat industry.

"The pendulum has swung once again. Initially after deregulation, we saw everyone moving away from the major bulk handlers and trying to create their own arbitrage opportunities by storing grain themselves.

"Now I think the industry realise it is not always possible to store all your own grain but they want to use an alternative to the big players, which is where these smaller bulk handlers come into play.

"They will provide competition and may create some small efficiency savings for growers."

Emerald Grain's managing director John Murray said the south-western NSW district was a key growing area for Emerald's grain business.

The Ardlethan upgrade site fits with Emerald's recently announced strategy to team up with logistics and transport business Qube Holdings to move its grain to port.

The grain will eventually go to the proposed Qube port facility at Port Kembla, announced earlier this year.

Earlier this year GrainCorp also announced efficiency upgrades and improvements to its turn-around times within its east coast network, closing or leasing many sites as part of moves to concentrate grain receivals at selected priority sites, a move it says will deliver an extra $5/t to growers.

Initiatives such as GrainCorp's Project Regeneration or the spate of new players providing competition in the storage and transport field may slightly reduce growers costs, but a quantum shift in the storage and logistics space is needed to make big savings, according to a grains supply chain expert.

Luke Fraser, Juturna, said while the solid investment in the supply chain was heartening, there is a need for an overhaul for peak efficiency.

"We're working with a freight network that is essentially drawn up on pre-Federation lines."

Mr Fraser said top of his wishlist would be an inland rail network.

"You see in North America, the real efficiencies come from long-haul transport."

He said the natural obstacle of the Great Dividing Range meant it was difficult to effectively get grain into certain east coast ports.

"If there was an effective national railway in place, you may find it is cheaper to move grain from central NSW to Adelaide, Melbourne or Brisbane, rather than getting it over the mountains."

Mr Fraser said large trains from regional intermodal sites would be the most efficient way of moving grain.

"If you can get big trains going long distances, it is very cost-effective, the main cost is getting a train to a site, so having more grain going on less trains makes sense."

He said he believed the best system would involve having smaller sites with the grain then transported to the regional hubs before going onto export.