Regional Australians are paying a premium for products produced on their doorstep. It’s an absurdity but unfortunately the truth. Why? Because farmers have to pay a premium for the distribution of their products due to outdated, insufficient transport infrastructure. Increasing consolidation beyond the farm gate and unfair trading practices throughout the agricultural supply chain is a major concern for Aussie farmers, and one that needs to be addressed as a priority in the upcoming election.
A potato may travel hundreds of kilometers to the city markets and distribution centers, only to return to its place of growth to be sold at an enormously inflated price. In fact the neighbours of the farmer who grew that potato may have to spend up to 20% more to purchase it than their city cousins. It’s not logical but it is the reality for regional Australians, due largely to the fact that road transport companies have not been compelled to improve their networks in decades because they enjoy highly profitable relationships with their customers. There has also not been enough support from government in terms of rail network development, which would be the more obvious choice to benefit farmers.
In a country as large as Australia, agriculture cannot be competitive without good transport infrastructure. Produce needs to be delivered as fresh and as fast as possible to maximise profits for farmers and satisfy consumers. Transport costs can make up to more than a fifth of farm gate value, which is enormous in an industry where there are constant price pressures from the major supermarket chains. Better infrastructure will reduce freight costs by increasing delivery times and reducing operating costs.
Australia’s roads and railways are under serious pressure. Population is increasing, freight requirements are increasing, and it is estimated that by 2030 there will be an additional 300,000 trucks on the road as well as greatly increased rail movements. To remain competitive three serious changes must occur now.
- Better Railways
Our national railway network requires upgrades and development if it is to continue to play an important part in distributing produce to market. With the pressures placed on our roads by a rapidly increasing population, it is imperative that more produce is carried by rail. There has been positive talk of government investment in rail track between Brisbane and Melbourne, however to support this investment, governments and the private sector have to also develop a network of intermodal terminals that are in the right place. The agricultural industry needs to be able to move freight across and between ports, rail and road networks and then on to their customers in an unbroken chain. This is of particular importance to those moving livestock. Ultimately, farmers need to have a reliable but cost effective transportation alternative to the expensive road transport monopolies currently in play.
- Efficient Shipping
The efficient movement of freight via sea is critical to Australia but the high costs associated with it are made worse by excessive regulation. Coastal shipping regulations need to be reformed to improve efficiencies and reduce costs to businesses. A simplification of the permit system would allow access to competitive rates from international shipping services, and a streamlining of the rules for moving cargo would go a long way to helping farmers have more transport choices at a lower price with better reliability.
- Giving farmers the infrastructure they need most
The Australian agricultural industry competes in an international export market where the competitiveness of our products can be heavily impacted by tariffs and subsidies to production by competitors. The industry has been faced with steadily declining terms of trade, where production costs have increased and competition has squeezed margins. Freight presents a significant opportunity to reduce costs whilst maintaining a trading advantage.
Australia is responsible for feeding many more millions than we have living here, and demand is only growing. Our challenge will continue to be achieving timely and efficient delivery of produce to meet the demands of Australian and international markets, and those markets and consumer demands are changing.
Transport infrastructure is a complex but vital issue in a landmass the size of Australia. Not only are we a very expansive island, but also we are largely made up of desert and have multiple states and territories all run by separate governments with their own agendas. The first and last kilometre can be critical for getting produce to market, and when local governments are responsible for their own road and vehicle regulations it can cause issues of continuity and ease. A federal government approach and a clear national plan for infrastructure development would be the most effective way to support our nation’s primary producers.