Co-op’s approach a win
Strategic planning is the key to cheaper freight rates and Moree co-operative "Grower Co" is working on achieving savings for its members.
If grain trains adopted a co-ordination strategy, as does Hunter Valley’s coal industry, transport costs from the North West to Newcastle port could very well drop by half – but it would take some people agreeing to work together.
Grower Co, a producer based co-operative centred at Moree, reckon it's got a way to achieve this.
With the help of the federally-funded Farm Co-operatives and Collaboration Pilot Program, they engaged a supply chain specialist who will guide them through the process. Australian Rail Track Corporation are behind the project, as they were during the record grain train run in 2015.
“At the moment individual grain trains are all over the place, says John Picone, executive officer of Grower Co. “Everyone is doing their own thing.”
By comparison, the privately operated Hunter Valley Coal Chain Co-ordinator arranges transport from 35 mines to the port, working with as many buyers to fill ships with the correct grade. Adding to this complexity is a lack of ‘visibility’ on incoming ships beyond two weeks.
Grower Co has done the maths and say the current rate of $47.75 per tonne, from Moree silos to Newcastle, could be halved if grain transport adopted a similar way of thinking.
The ability to improve cost efficiencies by using heavier, longer trains is the key – as proved by rail haulage providers in conjunction with ARTC. In fact, the majority of export grain trains are already longer and carry more per wagon than they were prior to the December 2015 “mega train” from Narrabri to Newcastle.
Engineered risk assessment of existing track and bridges now allows wagons to carry up to 8 tonnes more in payload. Between Narrabri and Moree, outside of the Hunter Valley Coal Network, these trains slow from 80km/h to 50km/h to compensate for additional weight. Under the Inland Rail Project this section will be renewed with construction beginning soon after planning and environmental approvals have been given.
Coordination of grain accumulation and associated train scheduling through one of the world’s largest coal supply chains, is another important aspect of a successful train trip.
By coming together as a group, deals can be made quicker, easier and financially beneficial to members. Grower Co has formed relationships with Cargill and Louis Dreyfus and would welcome more up country storage operators.
In dealing with the Cargill facility at Bellata Grower Co members who have already sampled and graded their grain are trucking from their own farm storage to the over-rail hoppers at Penny’s Lane, north of Bellata.
The last train went out earlier this month, with three producers filling more than half a 3800t train, double the normal size, with highest grade APH1 wheat for export by Arrow Commodities.
“We knew exactly what quantity, quality and protein we had contracted to deliver,” recalls group treasurer Charles Brett.
“Trucks to Bellata were half the cost compared to hiring them at harvest time, so we directly picked up an efficiency there, plus the speed of through putting at the site in addition to the labour savings in moving large tonnages in one day.”
He says the average return on participating members ‘investment’ this year was 36.5 per cent.
“Freight is the big killer,” says Mr Brett, who predicts co-ordinated grain shipments will be the new normal within a few years.
“We know we can do this better. No one has ever co-ordinated the movement of grain from farm to port before.
“There was never any incentive to make supply chain efficiencies in the past as the grower was just an up-country site price with the cost deductions already factored in.
“This is not about cutting anyone out. Everyone should be part of the savings.
“Part of what we gain through a co-ordinated approach will go straight back to the community where it was grown.
“I'm not going to suggest that all of those savings will go back to the farmer however everyone along the supply chain will benefit,” he says, highlighting the importance of a shared benefit when it comes to co-operative effort.
Mr Picone said the time was ripe for such an approach. Many farmers have already invested in on farm storage to take better advantage of opportunities that usually come well after harvest.
At the other end there is support from Grain Corp’s Carrington loading facility at Newcastle along with Newcastle Agri Terminal who view this project in a positive light and in between there is the ARTC which has offered extensive support.
With sections of the inland rail coming on line so soon – from North Star to Narrabri and Narromine to Parkes, Mr Picone said it was imperative that Grower Co prove that it can do the job and not get run over by a bolder and more organised generation of train transport.
Inland Rail will no doubt deliver cheaper grain from southern districts but Mr Picone is optimistic because that would leave more prime hard wheat available for export through Newcastle.
ARTC’s Michael Clancy agrees, saying the key is to maximise existing investment and leverage early Inland Rail upgrades to ensure more product travels by train.
“The greater efficiencies will encourage potential further investment,” he said, “not only in rail infrastructure but associated facilities and businesses.”