Australia’s GrainCorp Improves Payment Terms in Face of Tightening Competition

Faced with increased competition, and in response to feedback from its grain growers, Australia’s GrainCorp announced it is shortening its payment terms to its grain farmers from 14 days to 5 days. The terms will apply for growers supplying grain to the company’s east coast network, to its South Australian growers selling to GrainCorp from Viterra’s network, and to its growers in Western Australia selling to the group from CBH’s network.

The improved payment terms also come as GrainCorp maneuvers to acquire share of an increasingly competitive market space that is becoming more crowded as international players are taking away from the group’s former monopoly on the country’s grain ports, and are taking sales away from the group at up-country storage sites where growers deliver their crops.

GrainCorp’s east coast market share fell to 47% of the summer harvest as its volumes fell to 6.7 million tons from 7.6 million tons as CBH and Viterra have gained control of grain handling infrastructure in Western and Southern Australia.

Meanwhile, GrainCorp is spending $200 million to reduce its 250 grain receival sites in Queensland, New South Wales, and Victoria in a bid to increase efficiency and create an upgraded network of fewer, but more modern sites. However, the move by the group could cause disgruntled farmers who would have to haul their grain longer distances to turn away from the company, and opens itself to the possibility of increased competition by rival storage facilities.

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