Australia’s grain supply chains Costs, risks and opportunities Department of Primary DepartmentIndustries and of Regional Development Primary Industries and Regional Development aegic.org.au AEGIC is an initiative of the Western Australian State Government and Australia’AEGICs Grains is an Research initiative and Development of the W esternCorporation Australian State Government and Grains Research & Development Corporation Acknowledgements Contents We gratefully acknowledge the many people who have contributed to this report right from the early Acronyms .......................................................................................................................... 4 scoping of the study, to provision of data, discussion and feedback on various drafts and through to edit Abbreviations..................................................................................................................... 4 and design of the final publication. We are particularly grateful to staff at Viterra, GrainFlow, GrainCorp, Foreword ........................................................................................................................... 5 CBH and Emerald Grain who have invested many hours engaging with the authors identifying errors Recommendations ............................................................................................................. 6 and omissions and generally improving the report. We also acknowledge the important contribution of Key findings ....................................................................................................................... 8 Ms Tamara Alexander (nee Stretch) who contributed to this report directly by compiling and analysing Executive summary ......................................................................................................... 10 new information and indirectly through her contribution as the lead author of the first edition of AEGIC’s Australian Supply Chain report published in 2014. Methodology .................................................................................................................... 14 Overview of Australia’s supply chains .......................................................................... 14 We acknowledge that the help provided does not constitute endorsement of the report’s content, findings, Our approach ............................................................................................................... 16 or recommendations which are the responsibility of the authors. Logic behind our approach ........................................................................................... 16 Please note Costs and charges ........................................................................................................ 17 1. For international comparisons, export and import values vary depending on exchange rates and the information Wheat production and export from Australia ................................................................... 22 source. Location of cropping .................................................................................................... 22 2. All units cited in this report are metric measurements. Of particular note, the unit tonnes is a metric tonne Grain production and export ........................................................................................ 25 (1000 kilograms). Production and export of wheat ................................................................................... 26 Export in containers ..................................................................................................... 28 Structure of Australian grain handling and export systems .......................................... 29 Regulation of grain exports .......................................................................................... 35 Grain storage ................................................................................................................... 38 Authors On-farm storage ........................................................................................................... 38 Cost of farm storage .................................................................................................... 40 Dr Peter White | Senior Projects Manager Cost of receival and warehouse storage ....................................................................... 41 Dr Chris Carter | Economic Analyst Financial performance .................................................................................................. 44 Trends in grain storage on farms ................................................................................. 48 Professor Ross Kingwell | Chief Economist Freight ............................................................................................................................. 50 Rail .............................................................................................................................. 50 Road ............................................................................................................................ 53 Competitiveness of rail versus road ............................................................................. 54 Receival site efficiency ................................................................................................. 54 Australian Export Grains Innovation Centre Ports and shipping .......................................................................................................... 64 3 Baron-Hay Court, South Perth, Western Australia 6151 Grain port terminals ..................................................................................................... 64 P: +61 8 6168 9900 E: [email protected] Port regulation ............................................................................................................. 66 Port containerisation facilities ...................................................................................... 69 aegic.org.au Trends in port terminal operations ............................................................................... 70 Port terminal operational charges ................................................................................ 71 CBH rebates ................................................................................................................. 73 Department of Primary Industries and Sea freight ................................................................................................................... 74 Regional Development Other costs ...................................................................................................................... 76 Mandatory federal levies ............................................................................................. 76 AEGIC is an initiative of the Western Australian State Government and Mandatory state levies ................................................................................................ 80 Australia’s Grains Research and Development Corporation End point royalties ....................................................................................................... 80 Organisational costs ..................................................................................................... 81 Emerging innovations and technologies within supply chains ......................................... 82 Competitiveness of Australian supply chains ................................................................... 84 October 2018 Costs of wheat production in Australia ........................................................................ 84 All contents copyright ©AEGIC. All rights reserved. Concluding remarks ......................................................................................................... 89 The related bodies corporate, directors and employees of AEGIC accept no liability whatsoever for any injury, loss, claim, damage, References ....................................................................................................................... 90 incidental or consequential damage, arising out of, or in any way connected with, the use of any information, or any, error, omission or defect in the information contained in this publication. Whilst every care has been taken in the preparation of this publication AEGIC accepts no liability for the accuracy of the information supplied. MIRP18002EN 2 Australia’s grain supply chains: Costs, risks and opportunities Australia’s grain supply chains: Costs, risks and opportunities 3 Acronyms ABS Australian Bureau of Statistics Foreword ACCC Australian Competition and Consumer Commission AEGIC Australian Export Grains Innovation Centre AQIS Australian Quarantine and Inspection Service In 2014 AEGIC published the first of its supply chain reports on the cost of Australia’s bulk CBH Co-operative Bulk Handling Ltd wheat export supply chains. Substantial investment, reorganisation and regulatory change CIF Cost, insurance and freight was still occurring within the Australian grain industry in response to the removal of the CFR Cost and freight single wheat marketing desk in 2008. The report described these changes as well as the CSIRO Commonwealth Scientific and Industrial Research Organisation structures and costs involved in the bulk export of wheat and showed that supply chain charges were the single largest cost item for a grain producer in a typical year. DAWR Department of Agriculture and Water Resources