WAFarmers Grains section made a submission on the Inquiry into the Australian Grains Network to the Senate Rural and Regional Affairs and Transport Reference Committee on August 8, 2014. It provided an opportunity for the WAFarmers Grains Council to comment on the recent Tier 3 rail closure and the future of the grains industry in relation to supply chain efficiencies, grain marketing and export arrangements, competition constraints and transparency.
Some key points of the submission are provided below:
- Western Australia exports more than 80% of its grain, making a cost effective and efficient supply chain from farm to port essential for keeping the WA grains industry competitive in the global market. It is vital that the supply chain provides the least cost pathway from farm-gate to port and consists of proficient and cost-effective infrastructure for transport of grain. The infrastructure restrictions in WA are in the ability to efficiently move grain from upcountry storage to port, especially during the busy harvest periods.
- The ability to expand markets and create new and diversified opportunities at the domestic and international levels is fundamental to the economic growth of the state. Since the WA grains industry is export orientated, it is important that growers are able to transport and export their grain as efficiently as possible (by maximising supply chain performance) in order to take advantage of price signals in the market and optimise farm-gate returns. Farm-gate prices are determined by world prices, and WA growers take prices according to the global market. Key competitors of Australia in the world market, such as Canada and the US, have significantly invested in market promotion to advance their grains industry. For example in the US, the US Wheat Associates (USW) is vastly dedicated to promoting the use of US wheat internationally.
- Domestic transport, storage and handling facilities are major contributors to the overall competitiveness of Australian grain internationally. Western Australia needs to be efficient in its transport, storage and delivery of grain to market in a timely manner in order to maximise value. It is thus essential to have well-organized and coordinated rail infrastructure, as well as continued investments in road and rail systems to support the passage of WA grain to the world market. The closure of Tier 3 rails on June 30 2014 will prevent the safe and efficient transport of WA grain from farm to port. Transport of grain on rail is important for keeping supply chain costs low for growers, ultimately increasing the competitiveness of Australian grain internationally.
- Repairs on regional roads are mostly funded by local governments, and although the state government has invested initial money to address the short-comings of Tier 3 closure, more money is required to the meet the demand of moving large volumes of grain while maintaining integrity of the roads. For example, in the shire of Narembeen approximately 300,000 tonne of grain will need to be transported to Merredin by truck all on local government funded roads. Additional maintenance costs will be imposed on local shires which will need to increase shire rates to compensate for the extra wear and tear caused by added truck movements, increasing burden on local communities. This situation is not in the best interests of these communities and WA grain growers as it constrains competitiveness by increasing costs and inefficiencies in the supply of WA grain to the world.