A West Australian grain exporter says it is cheaper and safer to send Australian grain to China than to drought-hit farmers in South Australia and other states.
Livestock farmers grappling with an ongoing drought in SA are running short of feed and are looking to source high protein crops, such as lupin, and fodder from other states.
But Perth shipper John Orr said union and government-imposed shipping rules made it risky and expensive to send grain to other states.
“It’s horrendously expensive to ship interstate these days and there’s some really sad reasons for that,” he said.
Mr Orr said mandated higher wages for seafarers on interstate shipments added $60 a tonne to the cost of lupins and other grains compared to the average shipment to China.
Most of Australia’s domestic freight is transported via road or rail.
The nation has nine Australian-flagged ships and the government is looking to increase the fleet.
Graziers in South Australia are experiencing difficult times after low rainfall last year. (ABC Mid West Wheatbelt: Jo Prendergast)
Rationing feed, waiting for rain
Near Streaky Bay on the Eyre Peninsula, farmer Dion Trezona has been rationing the feed he has left for his sheep while hoping for rain.
Last year, he cut 60 bales of hay.
He usually grows about 1,000.
“It’s less than ideal,” he said.
“When you only have 100mm of rain for the whole year last year, the feed now is pretty well non-existent.
“It’s going to be very, very tight getting through to the finish line [after rain] at the end of June.”
Mr Trezona said he had brought some manufactured sheep pellets from WA on trucks.
Running out of hay was his biggest concern.
He said some grain prices had soared and the freight cost for feed was adding $100-to-$150 a tonne to his expenses.
“There’s no support over here in South Australia for the majority of grain producers in the state,” he said.
“The state government here seems to think we’ll grow the money to get the economy going for the state, but they don’t have to support us in the middle.
“When you’re 1,000 kilometres from anywhere and you just want stuff to rock up in bulk, a bit of support for some freight subsidies would be appreciated, if not needed.”
Dion Trezona says he is worried about running out of hay. (ABC Mid West Wheatbelt: Jo Prendergast)
Rules ‘deny efficient trade’
Mr Orr said he had received enquiries about sending lupin, and he wanted to assist, but he could not make the numbers work.
He said crew costs, Australian port container booking charges, and the risk of exorbitant fees if a container arrived at the wharf an hour late made it unviable.
“Plus, you still have to pack the product and then you have to get anthracnose testing done because of interstate quarantine requirements,” he said.
“Those containers get locked up while you’re doing the tests. There’s a lot of risk involved.
“This is denying efficient trade of goods, which actually hurts everyone, it hurts the engine room of the economy.”
John Orr says the costs of interstate shipping are prohibitive. (Supplied: John Orr)
Review underway
After promising to create a “strategic fleet” of up to 12 Australian-flagged and crewed vessels for commercial operation in 2019, the Commonwealth government also commissioned a strategic fleet task force report.
It made recommendations to reverse the decline of the Australian shipping fleet.
The report suggested shipping taxation incentives and government financial assistance be provided to ship owners and operators to reduce the cost gap between Australian and foreign vessels.
Maritime Industry Australia chief executive Angela Gillham said tax reform, such as seafarers’ income tax and changing corporate tax settings, was essential to make Australian vessels cost competitive with their international counterparts.
“When we are talking about the competitive nature of Australian ships versus international, it’s really all about tax,” she said.
“There are some really good opportunities to reduce the cost differential between Australian and foreign ships that are available for the government to do right now.”
Ms Gillham said the government needed to act swiftly.
“We have about nine vessels left, for a very large island nation that has a significant shipping task that exists within a fairly volatile geopolitical dynamic at the moment, vulnerable supply chains, we think it is incredibly urgent,” she said.
“We needed to get started on this a decade ago.”
Supply chain task force
After floods cut railway lines in 2022, the WA government formed a shipping and supply chain task force to examine industry links between WA, interstate and international customers.
“Current [Commonwealth] policy favours the use of international shipping lines for most import, export and domestic sea-borne freight,”
the taskforce report noted.
The report made a range of recommendations, including that the WA government work with the Commonwealth and other states to “level the field” with international carriers and stimulate an Australian-flagged fleet.
Sheep farmers in South Australia are carefully budgeting livestock feed. (ABC Mid West Wheatbelt: Jo Prendergast)
WA farmers miss price premiums
Barry Large heads up Grain Producers Australia, a national organisation representing grain growers.
He said Australian growers should have access to any domestic market at any time as long as biosecurity protocols were met.
“When it comes to handling and shipping, I find it distasteful that we can’t work this out to be able to help these places that are in need of quality product,”
he said.
“It’s putting added costs onto the growers who are finding it tough at the moment because they can’t access [the WA] market, so really it’s not helping anyone here.”
Mr Large said bulk shipping would normally be the most cost-effective way of moving large volumes of grain, while removing it from the road network.
“Quantity [should] mean decreased costs, and when it works the other way, you really have to ask questions.”
Mr Large said the current legislation review was an opportunity to create a more flexible and cost-competitive domestic shipping system.
A final report for the Coastal Trading Act review is due this year.
Joanna Prendergast
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