A cooperative group of farmers in southern Australia are proposing the development of a new grain transport, storage, handling and export facility to service the expanding needs of the region, and to break the dominance of the major competitive force of a single grain export system for the region.
Currently, the Australian export market is dominated by only the ‘big four’ global grain trading companies who also control Australia’s export grain handling and port facilities. This investment would break this monopoly in this region of Australia. Investment in the construction of new port facilities would underpin a long term investment strategy that could be vertically expanded throughout the supply chains.
There is a possibility of obtaining Government assistance and backing to develop the project as it aligns strongly with local Government industry development priorities for the region.
Suitable land adjacent to existing port facilities has been identified to develop the new export grain handling and loading facilities. The project is supported by an ability to source over 1.5 million tonnes of wheat and other grains from farmers with this development.
The low cost loading methodology identified for the project is frequently used successfully for other export activities in the region at a minimal cost. When combined with an estimated $20 per tonne increase in efficiency in grain handling associated with this project, which is significant when the total expected volume of grain handled is factored into consideration.
The construction of the infrastructure is anticipated to receive strong support from farmers, the grains industry, regional and State Governments, and it is expected that this project would receive major development status by Government. Construction costs are estimated in the range US $50 to $60 million
The potential for long-term consistent returns on capital, and significant growth are available, as the proposed facilities will break a monopolistic stranglehold that is currently in place on grain export facilities in southern Australia.
A consortium partnership is to be established as a joint venture between the grain growers (as suppliers) and the investor to undertake this project. The opportunity to vertically integrate the business in the long term is a real opportunity, complemented by other investments in grain production.