Grains Research and Development

Date: 16.01.2017

Growers in the trading game

Author: Tom Bicknell

Grain growers these days are not short of options when it comes to marketing their grain. While the majority of growers market through brokers using bulk-handling operators, an increasing number are marketing some or all of their grain themselves, dealing directly with buyers and often delivering from their own on-farm storage.

This can be time-consuming and is not without risks. Nonetheless, more growers are being attracted to online marketing platforms that allow them to deal directly with buyers. GroundCoverTM spoke to three growers about their use of online marketing.

John Worner, Lalbert East, Victoria

Photo of Lalbert East grower John Worner

Lalbert East grower John Worner says on-farm storage is key to his marketing decisions.

PHOTO: Tom Bicknell

Online marketing systems offer the potential to lower the overheads of marketing and bring it within reach of growers, says John Worner of J&R Farming Enterprises in Lalbert East, Victoria.

But he concedes it is time-consuming.

J&R Farming keeps daily records of prices collected from a variety of sources, including emails and text messages from grain marketers, phone calls to marketers and smartphone apps from GrainCorp and Emerald Grain. The business also keeps track of domestic market trends and activity overseas.

The decision to market directly was a pragmatic one driven by the ability to find the best price, John says. “We don’t use brokers to sell our produce as we were finding better prices than we were being quoted, sometimes from the same marketer.”

While John had been using the online Agfarm Advantage system for several years, that same thinking drove him back to selling direct to buyers. “We found that by ringing the grain traders ourselves we were often getting a better price, and even if the price was the same we were $2 to $3 better off due to not paying a commission,” he says.

J&R Farming’s marketing strategy is driven by an average target price set just before harvest. They sell from their own on-farm storage as well as through bulk handlers.

Phillip Otto, Clermont, Queensland

Photo of Queensland grower Andrew Otto

Queensland grower Phillip Otto uses online systems to sell quickly out of on-farm storage in higher-price periods.

PHOTO: Clarisa Collis

As with J&R Farming, the use of on-farm storage means Phillip Otto at Clermont in Queensland has different requirements for online marketing systems compared with growers who only use bulk handlers.

Four years ago, the Ottos installed 3000 tonnes of on-farm storage, a certified weighbridge and a 38-tonne, elevated, quick-fill silo.

“It’s gone really well,” Phillip says. “Before, we were hauling three grain trailers on a 110-kilometre round trip up to our depot. We haven’t used the truck since. The wages to haul the grain to the depot are a saving in itself, and a lot of the traders we deal with passed on half to three-quarters of the out-loading fees they’d typically get charged by the bulk handler. It’s been better for us and for the buyers.”

When Phillip began exploring online marketing systems, only iGrain allowed sales from on-farm storage. He feels online systems like this offer several advantages over traditional marketing channels. The agility of the online system means he can sell quickly out of on-farm storage to take advantage of periods of higher prices.

The online system also adds a layer of confidence when selling to unknown buyers: “This is our fourth season selling our grain off-farm. When we first got into it, iGrain was good because people wanted to buy, but we didn’t know their credit history. But if you list with iGrain, they do the credit checks. They charge $3 a tonne, which also covers insurance. If the buyer defaults, you are covered by the insurance.”

Over time, Phillip says he has come to know and trust many of those buyers and often now sells to them directly.

Janice Powell, Northam, WA

Photo of Janice Powell

Janice Powell, from Northam, Western Australia, sees online grain marketing as a way to support smaller buyers and diversify her marketing.

PHOTO: Evan Collis

In Western Australia, most buyers are already familiar faces to growers. The more limited number of buyers in WA compared with the eastern states puts some constraints on growers’ approach to marketing, according to Northam grower Janice Powell. She sees online grain marketing systems as a way to support smaller buyers, as well as diversify her marketing.

“In WA, it’s taken a long time to take off,” she says. “One of the reasons, I think, is that we don’t have as many selling options; there aren’t as many people buying. A lot of WA growers just target maybe three buyers, and sell to them year-in and year-out. In some ways, there’s not a lot of point using online marketing systems because people already know who they’ll sell to.”

“But in the eastern states, there’s a lot of smaller buyers. As a grower I want to support smaller buyers because the more buyers we have the more competition we have, and that’s better for growers.”

In Janice’s experience, smaller buyers also frequently offer better prices during harvest than the large buyers, who have already secured big grain volumes through forward sales earlier in the year.

Janice stores her grain in the CBH system and sells it through several channels, including direct to local buyers for cash and over the phone to grain marketers. While Janice sells the majority of her volume during harvest, she tries to spread sales out over a longer period, using a variety of sales methods to minimise price risk.

Two years ago she began using the online Clear Grain Exchange system, operated by the same parent company as the Profarmer Australia price intelligence service. Janice was attracted by the simplicity compared with selling over the phone, as well as the ability to set her own price, informed by what other growers and buyers were offering on the system, as well as broader market pricing.

While she has not sold a lot of volume through Clear Grain, Janice is pleased with how it has gone so far.

“Selling through this service gives us the opportunity to sell at the spikes in the market, because you can set the price you want and then wait,” she says. “Of course, the price you set must be realistic and you need to have done your research into the current market. The price you set can also depend on your willingness and readiness to sell.”

Her marketing strategy relies on being responsive to market prices and she avoids forward marketing. “When you look at the historical price over the past 12 months, our goal is to aim for average or above,” she says. “We try to avoid selling on the troughs – we want to leave ourselves open to any good prices if we can.”

Grain hygiene campaign

The South Australian Grain Market Access Group is urging growers to start planning the 2017-18 harvest now in terms of grain hygiene management.

The group, established before the 2015 harvest, is the first such group in Australia dedicated to promoting grain hygiene as a critical component of market access.

The group is led by the Grain Industry Association of South Australia (GIASA) and supported by the GRDC, Grain Producers SA, GrainGrowers, Viterra, the South Australian Grain Industry Trust Fund, Primary Industries and Regions SA, and fodder industry and independent agronomy consultants.

GIASA chair Lachlan Allen says preparation for a clean harvest should happen all year: “Now is the time to take control of snails and other pests, hit those weeds hard and make sure harvest machinery is well cleaned before it is put away in the shed,” he says.

“We continually need to remind ourselves that the commodity we’re handling is not just any commodity. Grain is a food, which will ultimately be used for animal or human consumption.

“By continuing to uphold high grain-hygiene standards, growers can enjoy ongoing access to a large range of markets across the world for their grain.”

The campaign is encouraging all participants in the grains industry to keep grain clean, ensuring all grain meets market requirements and is within physical, chemical and biological tolerance limits.

More information:

'Keep our grain clean' campaign, PIRSA

More information:

Phillip Otto,

0427 831 750;

Janice Powell,
jj.powell@activ8.net.au

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