June 6, 2014
GrainCorp to reduce jobs and storage sites as part of AUD200 million plan
As part of a AUD200 million (US$187 million) plan to revitalise its country grain network, GrainCorp, the largest grains handler in Eastern Australia, will cut 80 jobs and shut down unprofitable storage sites.
The company will cut its storage network to 180 sites. It will also close more than 72 sites across the network where less than 10% of the east coast crop is received.
GrainCorpis overhauling its network, focusing on localised "clusters", offering end-to-end export logistics and spending on the improvement of rail loading times.
GrainCorp believes that its investment will deliver a benefit to growers of AUD5 (US$4.70) per tonne of grain.
However, it wants state governments to invest in rail infrastructure, which could deliver an additional AUD5 per tonne to growers.
The investment programme, called Project Regeneration, will create a AUD4 million (US$3.7 million) one-off restructuring cost for fiscal 2014.
The new country network model would be "largely" in place by the time winter crops are harvested later in the year.
The investment is aimed at securing more grain in to its network as competition from offshore rivals including Cargill intensifies.
"We estimate rail costs in eastern Australia are AUD10 (US$9.35) per tonne higher than best practice, reducing returns to growers by around AUD180 million (US$168 million) in an average season," Mr Taylor said.
"GrainCorp''s investment will significantly improve our network''s interface with rail and help reduce rail costs by AUD5 per tonne.
"However, the full benefits of our network investment - and the rest of the AUD10 (US$11.70) - can only be unlocked if there is also further investment by track owners in the government-owned rail infrastructure that supports the entire industry."