VICTORIAN grain growers should see some country grain storages empty faster during the off-season.

The Victorian Government, GrainCorp and the Australian Rail Track Corporation will spend $5.6 million upgrading the rail loop at the Geelong grain terminal and automate signalling in Geelong and Dunolly.

Minister for Ports and Regional Cities Denis Napthine announced the funding as part of the Government's response to the Grain Logistics Taskforce report, which was released late last year.

The taskforce was put together last year to resolve bottlenecks in the supply chain which were hampering grain exports.

The rail loop at GrainCorp's Geelong terminal was identified as a major problem by the taskforce.

Dr Napthine said the rail loop could currently only handle grain wagons with an axle load of 19 tonnes - well below the 23 tonnes/axle rating for the lines leading into the terminal.

He said, by increasing the track rating from 19 tonnes to 23 tonnes, more grain could be delivered to the port by rail, reducing the number of trucks on the road.

He said the move would allow an extra 16 tonnes of grain to be loaded on to each grain wagon.

The higher payloads applied to the main lines controlled by the ARTC.

Many of the state's branch lines still cannot carry heavier loads.

Dr Napthine said the funding would also be used to automate signalling systems at Dunolly and Geelong, speeding up rail deliveries of grain into the GrainCorp terminal.

GrainCorp storage and logistics group general manager Nigel Hart said  the current signalling system at Geelong was manually operated, often causing delays in the turnaround times of trains.

Mr Hart said automated signalling meant GrainCorp could run an extra 500 train deliveries to Geelong each year.He hoped both the track rating increase and the signalling automation would lift throughput efficiencies at Geelong by up to 30 per cent.

Mr Hart was very pleased with the work of the Grains Logistics Taskforce and the Government's response to its report.

"We believe the Government's response to the taskforce has been absolutely fantastic," he said.

Taskforce chairman Simon McNair said the Government was progressing along the recommendations made in the report quite methodically.

"The Government wanted the industry to share in this (funding of rail infrastructure)," Mr McNair said.

"This is a good example of the grain industry working with Government to make it happen."