Facing a tough harvest and increasing competition from international players, Australian agribusiness GrainCorp has looked to boost its appeal to grain growers, shortening its payment terms from 14 days to just five.
Under previous terms, growers selling to GrainCorp would receive payment up to 14 days from the end of each delivery week. GrainCorp domestic marketing manager Michael Roche announced it would shorten this to five days on October 12.
“From today, growers know that if they deliver and sell to GrainCorp and transfer the grain in the same week they will then be paid the following Friday,” Roche said.
“The same applies to South Australian growers selling to GrainCorp from Viterra’s network, and Western Australian growers selling to GrainCorp from CBH’s network.”
The start of El Niño conditions have meant a drier October in parts of southeast Australia, resulting in a smaller harvest forecast.
On top of that, GrainCorp is competing for those reduced volumes with foreign players like Cargill and Wilmar, who have in recent years established and grown their own export capacity in eastern Australia, a region GrainCorp once monopolised.
“We are always looking for ways to improve our service and we’re proud to lead the industry in this way,” Roche explained.
“This is great news for growers who will receive payments faster than ever before.
“It will help them better manage their cash flow, enjoy greater payment security and the peace of mind of dealing with Australia’s largest listed agribusiness.”
The ASX-listed business has enjoyed a share price bounce in recent weeks.
Since closing at $7.85 a share on September 7, shares in GrainCorp have risen 17% to a close of $9.20 after the announcement on Monday.
The price is still down from its 12-month high of just over $10.20, however, with the increased competition and reduced harvest forecasts weighing on expectations.
Nonetheless, Roche is confident GrainCorp has what it takes to compete.
“We have a dedicated network of grain merchants across Australia who continually engage with growers to ensure we are meeting their needs,” he said.
“Today’s announcement is a direct result of our merchants listening to grower feedback.”