Eastern Australia receives historic grain import volumes as drought creeps further south


Posted

October 12, 2018 16:00:53

Australia’s biggest east coast grain export terminals have had to completely reverse their supply chain and are instead ramping up domestic imports as the impact of the drought continues to spread.

Grain from the western states have been shipped into the ports of Brisbane and Newcastle since August to meet a shortage of feed in northern New South Wales and Queensland.

But in a sign conditions are worsening across southern NSW and Victoria, imports have now begun at Port Kembla south of Sydney for the first time in more than a decade.

The grain is shipped, rather than moved by rail, across to eastern Australia because it is much more economic and efficient.

Three shipments carrying a total of about 100,000 tonnes of grain have now arrived at Port Kembla, and will supply large mills and stockfeed producers.

Dene Ladmore from Quattro Ports, which began operating an export terminal at Port Kembla in 2016, said making the switch from exporting to importing grain was a huge logistical exercise.

“We’re reverse engineering everything, it’s been a bit of an eye opener,” Mr Ladmore said.

“We’re doing our thing to bring grain back into New South Wales and most of it is coming from South Australia and Western Australia.”

GrainCorp, which also runs an export terminal at Port Kembla, has also begun reversing its supply chain and has just received its first shipment.

Imports at Port Kembla reflects extent of drought

Grains analyst Mark Martin said the amount of grain being imported into eastern Australia was unprecedented.

He said the reversal of the supply chain at Port Kembla — usually a major exporter — showed how much the dry conditions had crept south.

“Over the last two months through frosts and continued dry weather we’ve now seen southern New South Wales and even parts of Victoria lose a lot of crop,” Mr Martin said.

“A number of farmers whose crops were damaged by frost or continued dry weather have taken the opportunity to cut those crops early [for hay] rather than run them through for harvest.”

“We’re probably going to see one of the smallest grain crops on record that’s been produced on the east coast because of these dynamics.”

Companies float possibility of sourcing overseas grain

In a sign of the evolving market and climatic conditions, grain handlers are considering the possibility of importing grain from overseas to meet demand.

Australia has not been an importer of grain since the millennium drought, but GrainCorp general manager of operations Nigel Lotz said it may be considered.

“In the first instance we’re doing the domestics, so from WA and SA, but certainly we’re looking at the viability from a biosecurity point of view from overseas,” Mr Lotz said.

“As a holistic viewpoint we’re looking at trying to bring international grain in but we’re not there yet, there are a number of issues that have got to be resolved on that front.”

Under national biosecurity laws, grain is not allowed to be imported from overseas.

Mr Martin said while a number of handlers had applied for an exemption, it was “highly unlikely” to happen.

“Basically it has to be cooked or some sort of heat treatment done to it to ensure that if there is any wheat infestation in that grain, it’s killed before it gets moved from the port area,” Mr Martin said.

“They may be able to bring grain in from other countries at a cheaper rate than what it’s costing to bring it in from WA, but there will be a cost to be incurred if they have to treat it.

“Western Australia will have enough grain to look after our requirements.”

Shipments of grain into Port Kembla and Newcastle are expected to continue ramping up, and Dene Ladmore from Quattro Ports said it would continue importing grain until Christmas 2019.

“This will be really a 12-month program, so it could be a busy 12 months in this space for the east coast grain terminals,” Mr Ladmore said.

Both analysts and grain handlings have tipped Geelong in Victoria to be the next terminal importing grain as conditions deteriorate further south.

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