With Australia being one of the world’s leaders in the production of high-quality, disease-free grain crops, naturally, there are many players that keep the wheels of the industry in motion. From the farmers themselves, who have the responsibility of consistently producing a high-quality product, right through to processing staff, manufacturers, and end consumers. In terms of roles, none however are more valuable to a cropping enterprise in terms of productivity and cash flow, than a grain broker.
With wealth of industry knowledge, experience, market experience and valuable advice to share, Australian grain brokers are an essential part of the grain industry, enabling grain producers to focus on farming operations and producing a superior quality product, rather than spending time negotiating the sale of their product.
We take a look at the role of a grain broker, what the role involves, and the applicable responsibilities associated with a role of this nature, in addition to the benefits to farms of utilising an expert grain broker service.
Grain broker – a definition
Before focusing on the role of a grain broker within the grain trade sector, it is important to look at what is required of the role. The definition of a grain broker, is quite diverse, given the complexities and the multi-faceted aspect of the role. The GTA Trade Rules’ definition of a grain broker, describes the role as an independent person, firm or electronic trading platform, who is engaged on a commission basis to facilitate agricultural contracts, liaising with, and holding the instruction of buyers and sellers in the market. This definition also provides that the goods associated with these agricultural contracts involve goods in which the grain broker does not have actual possession.
With Grain Trade Australia responsible for setting the standards in relation to the operational aspects of the grain trade in Australia, the above definition clearly outlines the requirements of the role, but hat else do grain brokers in Australia do?
What does a grain broker do?
Essentially the role of a grain broker, pursuant to the above definition, is to act as a facilitator through the contract and sales phases of the grain production process. They work with the buying and trading of the grain product, and act as the go-between, the negotiator, and the advisor, working to obtain the best results and the best deal for all parties.
Additionally, grain brokers given their wealth of industry knowledge, also assist farmers, their clients, to understand grain marketing and risk management in order to maximise profitability. To achieve this effectively, successful grain brokers must have substantial knowledge of the commodities market, and the ability to accurately predict market movements, given grain marketing is based predominantly upon futures contracts.
Grain brokers typically work on a commission basis, with their payments typically described as brokerage fees, which can include flat fees per unit of grain, as well as percentage fees, particularly when they have facilitated deals of a large quantifiable scale.
What is the difference between a grain broker and an agent?
It is important to note that a grain broker and an agent are two completely different things. A grain broker is only authorised to act on instruction form their client, and to negotiate terms of an agreement on the basis of these instructions. An agent, however, has a much broader scope, and is able to negotiate as well as act on behalf of a client, meaning they have the ability to bind a client to specific terms and enter an agreement on their behalf.
What are the benefits of using a grain broker?
The benefits of using a grain broker are self-explanatory. Farmers, farm, grain brokers, broker grain deals for farmers! Using a grain broker means that farmers can focus their time on what they do best, being farming the product, leaving the negotiation and administrative side of the sales process to an industry expert.
Given that grain brokers have extensive market and commodities knowledge, as well as a thorough understanding of grain marketing and current trends and movements, using a grain broker provides farmers with access to quality information that can assist with future crop planning and effective cash flow management.
Grainwise brokerage services – How can we assist?
Founded in 2015, Grainwise offers comprehensive transactional grain brokerage services. Based in the Mildura area, we work collaboratively with our clients, with our primary focus being to obtain the best value for money on each and every transaction that we do.
The Grainwise team are well established within the industry, with a pool of buyers at our fingertips, meaning taking your grain to market has never been a simpler process. Further, our diligent and highly focused team, monitor the market consistently, by the hour, and manage buyers and sellers markets to ensure that you get the best value for your crop, regardless of location, market, or season. We help you plan for the season ahead and develop strategic marketing plans for our clients to ensure they’re maximising on their storage and transport resources.
We provide growers with advice and solutions that provide growers with a greater level of control over the sale of their grain. We focus on long-term solutions that will last the distance, rather than on short term strategies.
Our dedicated and experienced grain brokerage team have extensive local knowledge and solid resources that provide our clients with peace of mind during the busy harvest period, in addition to instilling confidence, so you can focus on what you do best, farming and growing a superior quality product.
As is indicated above, working with a grain broker has many benefits for grain producers. From access to experienced market knowledge and valuable insight, through to positive impacts to cash flow, grain brokers assist farmers in maintaining market position, assist with negotiating the sale of their product for the best value and are a solid partner in the grain sales process. If you are in the market for a new grain brokerage service, give the team at Grainwise a call today, and discuss your options with one of our highly experienced grain brokers today.