Grain Producers Australia says fresh economic modelling by the CSIRO raises expectations for grain producers about the vital need to lower freight transport costs and boost farm sustainability.
A new CSIRO report has provided economic modelling which suggests the Inland Rail could cut freight transport costs by up to $213 million a year, pointing to a $48.87 per tonne saving for cropping.
The Federal Government’s media release said this freight reduction could result in “huge” savings for businesses and industries that use the line and further driving the growth of regional Australia.
But GPA Chair, Barry Large said the high-level rhetoric about reduced freight costs needed to be matched by real bottom line savings for Australian grain producers and their communities.
“The CSIRO’s findings provide a light at the end of a long tunnel for the grain farmers and their communities who may benefit from the delivery of this rail infrastructure,” he said.
“However, this is a forecast future return only and right now, grain producers throughout Australia are paying the highest transportation costs. This is having a significant impact on our sustainability and competitiveness and more needs to be done across the nation to address these constraints.”
A 2019 study by AgriFutures, ‘The Impact of Freight Costs on Australian Farms’, also highlights why greater action is still needed by governments, to reduce this significant cost of grain production.
The report said freight costs (moving commodities to and from ag properties and off-site storages) are highest for Australian grains, representing 27.5 per cent of Gross Value of Farm Production.
By comparison the cost is 1pc of GVAP for Australian poultry farmers. The study also showed that for 2015-16, for grains (winter cereals) this $27.5pc represented $2.64 billion of the $8.5 billion in gross value of farm production.
GPA Deputy Chair, Andrew Earle, said in GPA’s 2022 Federal Election Survey, 44.4pc of respondents named transportation infrastructure/freight costs as one of their top five policy issues which they want prioritised by the Federal Government.
“That’s why we’re calling for high-level future-proofing investment from government in this area to help cut these huge freight costs that we’re still paying for right now,” he said.
“We’re calling for a comprehensive strategic analysis of the national grains supply chain and associated infrastructure costs such as road quality, rail connectivity and port access, to inform national decision-making on future investments.”
Mr Earle said investments were needed to ensure the Australian grains supply chain is fit for purpose, and designed to meet projected growth targets – not only for grain growing regions, but for supplying key customers such as grain exporters, millers and livestock feeding agents.
“Australian producers need access a supply chain that provides the least-cost pathway to market and optimises our international competitiveness,” he said.
Mr Large said GPA also support the view of NSWFarmers that the $14.5 billion investment in the Inland Rail project needs more work to fully benefit agriculture and the regions.
“However, Inland Rail is only part of the overall freight picture and much more needs to be done. The overall investment in this area needs to align with other strategic public and private priorities, to deliver genuine connectivity, and cut these high grain freight costs for grain producers,” he said.