Report shows Australia has struggled to compete on the global market because of high transportation costs.
SYDNEY, AUSTRALIA — A report offering insight into transportation issues that impact the Australian grains industry was welcomed recently by David McKeon, chief executive officer of GrainGrowers. GrainGrowers is an independent grain farmer representative organization with 17,500 members across Australia.

The report, “TraNSIT: Unlocking options for efficient logistics infrastructure in Australian agriculture,” was funded through the Agricultural Competitiveness White Paper by the Federal Government. It outlines new modelling by the Commonwealth Scientific and Industrial Research Organization (CSIRO) of current and potential transportation routes in agriculture in Australia.

McKeon described TraNSIT as “an important tool” to understand and help solve agriculture’s freight and infrastructure challenges.

“Having all agricultural commodities included in the modelling provides consistent information and a real basis for comparison of infrastructure priorities and actions required to reduce industry costs,” he said. “It has allowed industry and government, for the first time, to have a model which it can use to model different options and really understand where infrastructure investment will produce the best bang for the buck.”

McKeon said GrainGrowers had commissioned CSIRO to further investigate the grains supply chain to identify pinch points and to be able to model a range of scenarios to reduce costs and improve freight efficiencies.

“Each year some 45 million tonnes of grain are transported great distances from farms to ports, feedlots, stockfeed manufacturers and flour mills,” he said. “Freight is a significant cost to grain farmers and this report estimates it costs the Australian grains industry more than A$2.6 billion a year to get grain from farm to market on road and rail. The CSIRO’s modelling will provide an essential tool for us to understand the road and rail costs and how these can be reduced in Australia.”

McKeon said approximately 39.8 million tonnes of grains were exported from Australian ports in 2016-17. In some cases, the country has struggled to compete on the global market because of its high transportation costs.

As a result, GrainGrowers is seeking a more efficient grains supply chain and lower freight costs for farmers, McKeon said.

“We need to have robust and comprehensive data in order to influence policy and investment decisions and that’s what CSIRO’s modelling of the grains supply chain will provide,” he said.

According to the report, grain has the highest total transport costs of any commodity at A$2.6 billion, accounting for 45% of the total cost for all of agriculture. Additionally, grain accounts for 90% of rail transport costs at A$487 million.

“CSIRO’s modelling will be extremely valuable to help us identify ways to improve efficiencies and save costs in getting grain from farm to port or to domestic customers; for the benefit of farmers and their hip pockets,” McKeon said.