MELBOURNE, AUSTRALIA – After two years of COVID-related postponements of industry functions, the Australian grain industry finally met in late July in Melbourne for the AGIC 2022. Discussed at the conference was everything from geopolitical tensions on global food security to plant breeding technology, adapting to future megatrends and the use of digital technology.

The 2022 conference theme was “Growing with Grain,” which Grain Trade Australia (GTA) Chairman Andrew Goyder said was needed after the disruptions of the last few years.

“It is important to come together as an industry and its people as the impact of the past few years has created a toll on the grain industry and its communities,” Goyder told World Grain. “The conference theme of Growing with Grain may seem strange following two massive production years in Australia. However, it is apt given we are looking at a worldwide food security issue driven mainly by the conflict in Ukraine and the limited export supply to the traditional customers of Black Sea grain.”

Murray Watt, the newly elected federal agriculture minister, opened the conference by noting that the new federal Labor government is strongly focused on agriculture, with an emphasis on the grain sector. He highlighted the need to address strategic supply chain opportunities to continue to develop and grow what is a world-leading grains sector. He emphasized the importance of international cooperation and the continued need to focus on ensuring trade between countries can continue unimpeded and based on market principles.

On day two, leaders from the grains industry discussed key challenges, including supply chain bottlenecks, labor shortages, and its resilience in facing and winning the challenges of two consecutive large crops.

Taking part in the forum were: Ben Macnamara, CBH Group; Phil Hughes, Viterra; and Tony Geitz, Louis Dreyfus Co.  

Labor shortages largely were attributed to COVID-19 and the restrictions the pandemic put on movement across state and international borders, but the problem can be traced further back, said Hughes.

Before COVID, Viterra had an ample supply of backpackers and “grey nomads” (retired traveling Australians), but Hughes pointed out that although the pandemic had made recruitment difficult, it only exacerbated the skills shortage.

“Over the last 20 years, agricultural colleges have closed so we don’t get the flow of graduates into the industry,” Hughes said. “We need to work with the government to fix the problem.”

Hughes said the industry needed to sell itself and focus on skills and training to address labor shortages.

“I was pleased to hear the new prime minister recently announced a skill and jobs summit for the end of the year,” Hughes said. “I hope agriculture and rural industries will be included.”

Macnamara, the newly appointed CEO of Western Australian bulk handler CBH, said the company also had trouble filling harvest casual positions but had overcome it in the last season by targeting young people.

“Last year we needed 2,000 harvest casuals,” he said. “We advertised and saw a lot of uptake from the younger generation.”

Macnamara said agriculture appealed to young people because they view it as more sustainable than other industries. He said CBH was competing with the resource sector for truck and train drivers who started in grain but then moved.

“The majority of CBH workers live in the regions, but we are seeing more of a drive-in, drive-out culture in Western Australia,” Macnamara said.

He added that part of the solution was to invest in schools and hospitals to create the infrastructure communities needed.

Macnamara also flagged CBH’s goal to increase capacity at its ports from 1.6 million tonnes per day, which it currently exports, to 3 million tonnes by 2033, and decrease supply chain bottlenecks to lift productivity.

“Since 2018 we have been working with the state government to understand all of the bottlenecks through the supply chain, both rail and road,” Macnamara said.   

CBH welcomed a recent $200 million announcement in joint funding by the federal and state governments to make rail improvements and deconstrain the supply chain.

While talking about the Western Australian supply chain, Macnamara was asked about the state’s record harvest and the impact on CBH to move the grain through the system to export.

“Previously, CBH’s peak shipping was 15 million tonnes in a given year,” he said. “Obviously when you receive 21.3 million, that doesn’t go into 15 million. We offer capacity around the 17-million-tonne mark. This year was the first time we’ve seen crop size exceeds capacity. It comes back to deconstraining the supply chain, so rail is a really important component. About 60% of the tonnes we move to port go via rail.

“We need more rolling stock, more drivers and you need to take the bottlenecks out. The Albany Zone is a really good example of that. We run two trains but there are no passing loops, so deconstraining means putting in sidings so we can run additional rolling stock down there and getting more tonnes to port.”

He said CBH expected, even with the peaks and valleys that come with annual grain production, that by 2033 the average crop total will be 22 million tonnes with a peak of 30 million tonnes. Macnamara said   the output increase will be due to improvements in technology and agronomy as growers adopt new practices.

Macnamara said the supply chain needed to be agile and resilient to meet the challenge of supply chain shocks such as drought, floods and bushfires.

“We’ve identified where we’re fragile in the supply chain,” he said. “So, of all the processes and the systems, if you don’t have people to operate it, then you run into issues. In Western Australia, we had very few shipping pilots. A lot of them lived in Noosa so they were fly in, fly out. If a pilot got struck down by COVID our whole system would stop.

“In a control room run by a rail operator, there are only four people that run a train. The whole system and network would stop.”

When asked about the opportunities that lie ahead for the industry, Macnamara said challenges were opportunities.

“If we think about agriculture, we’ve probably never been in a better position right now,” Macnamara said. “The challenges we’ve got are large crops and not having enough capacity to get the grain out, so the opportunity for us is to address those challenges. Working with government to inject more capital into our supply chain so we can get more tonnes to our ports.”

He said technology was another opportunity, telling the forum that information technology and getting the right data into the hands of decision-makers was something CBH had started to address.

Hughes said the industry faced the challenge of decarbonizing the supply chain, which he said would take considerable investment given the world’s reliance on fossil fuels to power ships, trucks and trains.

“The investment that is required in that is incredible — at a level we’ve never seen, really, and will take a number of decades,” Hughes said.

Looking for opportunities, Hughes said Australia was well placed to service the growing demand for food in its neighboring regions.

“Opportunities for Australian exporters exist into South Asia, including the subcontinent and Africa,” Hughes said. “The population of Africa by 2030 is going to be 1.7 billion people. Amazing opportunities. Africa is already a large importer of grain.”

Wrapping up the conference was a panel discussion on price discovery with Andrew Weidemann, Grain Producers Australia, and David Johnson, Emerald Grain.

Weidemann and Johnson spoke about the perspectives of growers and grain marketers with Weidemann noting there always will be tension with growers on price discovery.

Weidemann said many growers on the East Coast were building on-farm storage, especially when they could harvest faster than it could be received into a bulk handler facility.

Johnson questioned whether using CBOT as a pricing tool was still relevant to Australian growers given that it accounts for little of the world’s wheat trade.

“Forty years ago, CBOT represented 42% of world wheat trade,” he said. “Twenty years ago, it was 23%, and today it is 10%. Is this still an appropriate pricing marker when most wheat comes out of Russia and the Ukraine?”

Weidemann said the industry needed to look seriously at price transparency, calling on it to either self-regulate or for the government to step in.

“We want to grow the pie together but if someone gets greedy it becomes a problem,” he said.