Home > Grain CAPEX investment signals growth for Australian agri sector

Grain CAPEX investment signals growth for Australian agri sector

article image Agriculture is on the verge of bigger things

Leading engineering firm Soto Consulting Engineers observes the growing influence of global markets on Australia’s agriculture sector, as reflected by investments in capital and operations infrastructure, particularly in the grain sector.

The company sees the intelligent new investment in infrastructure and supply chain equipment as a positive development after many years of inertia.

Managing Director Mr Frank Soto notes that the grain sector of Australian agriculture has begun new growth acquisition and bulk handling infrastructure renewal with a very clear objective. Referring to ABC’s Landline television program on the subject, he said that top industry players suggested ‘deregulation’ was the catalyst changing the way Australian ports in particular were working to maintain market share against international competition.

Soto Consulting Group is a large niche-sized engineering firm with global markets and reach, specialising in partnering arrangements. Partnering involves extensive on-site presence and face-to-face contact for clients with Soto’s motivated engineers utilising cutting edge technology and software to deliver speed and accuracy.

Mr Soto emphasised the importance for grain companies to have an engineering company be prepared to work very closely as deregulation is forcing smarter analysis, design and planning in CAPEX and OPEX to enable existing assets and new construction to deliver the best possible ROI.

The most notable example of agri-sector investment change is found on the east coast of Australia where the Newcastle Agri Terminal (funded by a consortium that includes CBH, the farmers' co-op from the west) and one of GrainCorp's seven East Coast ports are operating just a few hundred metres from each other across the Port of Newcastle.

Explaining the reasons for building a port right next door to the powerful GrainCorp port, Newcastle Agri Terminal’s Jock Carter referred to cyclical capacities and how his terminal was engineered and designed to manage bulk handling for the modern global market and shipping, whereas its competitor had not upgraded for quite some time.

According to Mr Soto, the Newcastle Agri Terminal is an example of one company in Australia’s grain handling industry engineering its system to deliver a competitive advantage in meeting modern turnaround expectations such as train lengths, shipping access and loading.

Global player Bunge is also spending about $40 million on a new grain terminal at Bunbury, WA. While Bunge has been buying port capacity from nearby CBH, the company has decided to invest in specifically designed infrastructure to control its own future. Despite the fact that CBH's Kwinana port ships nearly all the export grain out of the west and runs its own rail network, Bunge has chosen to invest and build more capacity to meet the needs of the Australian market.

According to Mr Soto, Bunge is also retrofitting and upgrading an existing woodchip loader while building its own storage and conveyor to reduce capital costs to counter its more expensive mode of grain delivery by road rather than rail. Mr Soto observes that these examples of infrastructure modernisation for the Australian agriculture sector indicate the importance of smart planning and design.

Grain companies can consult with their engineering partners on strategies to create bulk handling systems that can be changed according to market needs.

The Asian market offers extremely high potential for Australian grain exports, and agriculture companies are realising the importance of investing capital in upgrading domestic supply chains. Deregulation is creating an operating environment calling for faster rates of grain handling and movement to port and onto ships.

Describing the new wave of investment as very timely, Mr Soto concludes that Australia, as the fourth largest grain exporter in the world, cannot lose sight of the standard of its infrastructure.

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