How to tackle grain's biggest cost burden - a $2.1b freight fiasco

It's a cost blowout challenge which has become so big growers in Canada and Ukraine on the other side of the world are now significant threats to Australia's grain sales to nearby markets in Indonesia, despite our crop's sea transit times being up to 75 per cent faster.

A multitude of disjointed rail and road freight management rules, combined with poor investment in weather-proofing freight routes and thousands of bridge weight restrictions preventing trucks using designated grain corridors, have undermined the efficiency and sustainability of our 45 million tonne average grain harvest.

Industry advocacy body, GrainGrowers, has also highlighted how unprepared the freight sector is for sudden rises in grain production and demand, such as those witnessed in 2022-23 when Australia grew a record 65.7m tonne winter crop.

Western Australia alone hit 25.6m tonnes, or 40pc more than its previous 2016 18m tonne record, and 65pc above its 10-year average.

An extra 25,000 tonnes of freight capacity was needed every day in WA alone in 2022-23.

GrainGrowers chairman, Rhys Turton, said the challenges were so complex and ingrained, involving 110,000 different freight routes, they would not be easily fixed.

However, the organisation had spent almost 18 months developing a practical road map for governments to use to help revive the industry's global competitiveness.

Its six point action plan starts with basic strategies such as bridge upgrades for key high volume grain freight routes, upgrading rail sidings and passing loops to speed up critical grain corridor movements, and simplifying management of rail operators' access to the network.

It also includes longer term goals such as developing plans for freight infrastructure to cope with autonomous vehicles, and harmonising safe working rules and priority grain freight routes across all states.

GrainGrowers initially worked with consulting firm, LEK, to identify supply chain pinch points, then talked with growers, transport operators, port businesses, domestic grain millers, feedlots and peak industry bodies to compile a pragmatic pathway to lift productivity and efficiency.

Mr Turton said a unified and considered approach would be vital to addressing the multi-faceted issues outside the farm gate which were eroding the on-farm productivity growers were achieving.

"Increasingly, our ability to compete on the global stage is not just determined by what we grow, but also how efficiently and effectively we can get our grain to market," he said.

"For context, prior to the conflict between Russia and Ukraine, both countries' production costs were $70/t to $120/t less than Australia's."

GrainGrowers, using CSIRO modelling, estimated freight now represented almost a third of the cost of producing Australia's total annual grain crop.

Its freight strategy report said while Black Sea region volumes were currently reduced, they would normalise in the medium term and other lower cost export nations were vying for Australia's key and nearby markets, too.

The freight strategy's launch was supported by a panel discussion with supply chain participants from the farm, road, rail and grain handling sectors, highlighting disturbing fragility and dysfunction in the rural freight network.

Regional road conditions were so rough a Victorian trucking operator recently told the Australian Livestock and Rural Transporters Association the steering column on his Kenworth prime mover had snapped while moving grain on a pot-holed route.

ALRTA executive director, Rachael Smith, said local roads in all states, supposedly prioritised to carry rural freight to port or local consumers, invariably had a patchwork of load limits blocking the most logical routes to market.

"Local government road maintenance is chronically underfunded by $1b a year - councils can only repair something if they win federal or state government grants," she said.

Victorian Wimmera farmer, Ryan Millgate, said deficient bridges caused "a lot of pain" for farmers trucking grain, likening them to one inch diameter joins halfway along a length of two inch poly water pipe.

"If you're expected to find an alternative route that takes an extra 100 kilometres to travel what was supposed to be a 400km trip, you've just lost all the crop productivity gains you made on the farm," he said.

"People opt to just drive straight over the bridge."

Victoria was also notable for some extraordinary rail freight challenges, including lines where train speeds were limited to 20km an hour, and different driver training, telecommunications and access standards in different parts of the state.

Australasian Rail Association freight general manager, Georgia Nicholls, noted even red and green signal configurations were different on different sides of Victoria.

Mr Turton said while growers were at the heart of GrainGrowers' national freight recommendations which had paid close attention to local roads and bridges, fixing the supply chain needed to focus on broader national objectives - road funding, road regulation, bridges, rail, ports and freight decarbonisation.

Fellow industry body, Grain Producers Australia, welcomed the new strategy and hoped to work collaboratively with all stakeholders to campaign for better freight outcomes.

"We know an efficient supply chain is vitally important to the business of growing and selling grain," said chief executive, Colin Bettles.

"We must capture more value, not only for growers, given this is a significant cost of doing business, but also for our industry and the national economy."

The framework's key objectives focus on encouraging competition and new supply chain entrants; increasing scalable capacity within the supply chain; streamlining and harmonising regulation; building supply chain resilience; supporting new technologies and innovation, and enhancing freight sustainability.

The road funding action plan would require each state developing, in the short term, a grain freight strategy and increase funding mechanisms such as the Roads to Recovery program and critical grain freight routes, instead of relying on grant-based applications.

Improved road regulation had potential to substantially reduce logistics costs, starting with more collaboration between government jurisdictions to streamline high productivity freight vehicle regulations and allow local councils to share resources which helped them facilitate road access decisions.

Bridge infrastructure needed to be targeted for sufficient upgrade funding so the "whole route" could carry higher capacity vehicles, including improving cross-border bridge load and dimensions to simplify interstate movements.

Funding for critical rail freight corridors should be prioritised, too, as well as harmonising rolling stock access agreements and identifying opportunities to standardise the network and upgrade grain sidings and loading capacities.

Port regulation needed a national approach which ensured greater consistency between different jurisdictions.

Decarbonisation would need to be a fundamental focus for the freight industry, requiring nationally coordinated and strategic transition within the supply chain.