Australian grain growers hurt by high freight cost


THE high cost of freight is pricing Australian grain growers out of lucrative export markets.

And despite their distance to key markets such as Indonesia, Black Sea region grain growers are selling their crops further afield and undercutting Australia in the process, Grain Growers chief executive David McKeon said.

Australia was lagging behind Black Sea region grain growers who are enjoying lower costs of production and shipping prices and upgraded ports,

Black Sea wheat is landing in Indonesia “$25 to $40 cheaper per tonne than Australian wheat”, Mr McKeon said.

He raised the issue with Agriculture and Water Resources Minister David Littleproud this month and said the minister had a “strong awareness of the challenges the grains industry was facing”.

Mr McKeon said a recent study comparing Australia’s freight costs to Canada found “on a per tonne, per kilometre basis, Canada was four times more efficient than Australia”.

He said there was scope for reducing Australia’s supply chain and freight costs.

Rabobank senior grains and oilseed analyst Cheryl Kalisch Gordon said 30 per cent of free-on-board costs in Russia, Ukraine and Australia were domestic freight costs.

“It’s a real challenge when in Australia $56 a tonne is attributed to the transport of grain,” Ms Kalisch Gordon said.

She said the grain-growing regions of the Black Sea had improvements in storage and ports, but there was “lots of room for improvement in the domestic landscape.”

“Some of the grain is being shipped 2000km through Russia to port,” Ms Kalisch Gordon said.

However, she said in the past decade 80 per cent of the ports have had investment and were now “competing with some of the best in Europe.”

Grain Growers national policy group met with an expert panel last week that is developing the Federal Government’s national freight and supply chain strategy.

In its submission to the strategy, Grain Growers said Australia’s ability to compete in global markets was contingent on “low cost, reliable and efficient supply chains.”

“The cost per tonne per kilometre to transport grain in Australia are well above those of other grain exporting nations,” Grain Growers submission said.

The final report on the national freight and supply chain strategy is due to the government next month.


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