THE delays in moving grain to port in Victoria caused by industrial action will have a negative impact on growers, the state’s peak farmer body says.
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Steve Sheridan, Victorian Farmers Federation grains group manager, said while bulk handlers and exporters would feel an immediate economic impact as they incurred additional costs as a result of grain not being moved to port, the problems would hurt growers down the track as they missed key marketing opportunities.
“We see exporters looking to now execute shipments originally planned out of Victorian ports out of interstate facilities. You’d have to think there is the possibility of marketers looking at other options due to the perceived risk in Victoria,” he said.
“It would not surprise if we saw a regional discount in prices for old crop emerge here in Victoria as a result as marketers looked to ensure they do not incur port demurrage fees.”
Mr Sheridan said while train drivers had agreed to return to work and Pacific National was committed to returning scheduled grain movements to schedule, the lost capacity would be difficult to make up.
“Given the season, where the supply chain was virtually booked out anyway due to the big harvest, you can’t just remove 160,000 tonnes of rail capacity and expect to catch up,” he said.
He said with planned rail upgrades as part of the Murray Basin Rail Project, time was at a premium.
“The last thing we want is for growers to have warehoused grain in upcountry sites with their only option moving it by road, which is more expensive and time consuming,” he said.
“You’d then see a situation where growers will wear the cost of storage fees and the finance.
“There are the immediate costs to the exporters with ships waiting to be loaded in terms of demurrage, but the industry also needs to look at the knock-on costs as well as the headline figure.”
Mr Sheridan said it was disappointing Pacific National and its drivers were at war at such a critical time.
“It really hurts, as all the dispute is doing is making the grain rail freight sector uncompetitive,” he said.
“Grain freight can be cyclical in line with seasonal crop production variability so those involved need to be ready when there is a big crop to move.
“For PN they are missing a chance to generate profits while the drivers are jeopardising their job security.
“These types of disputes also can harm the entire industry, which is committed to moving grain by rail, it is difficult to attract either government or private investment into rail when there are issues such as this.
“You would not want to see a scheme such as the Murray Basin Rail Project, bringing long awaited Government investment into our rail infrastructure, jeopardised as a result of an enterprise bargaining agreement gone wrong.”
VFF grains group president Ross Johns said the dispute had been bad for the state as a whole.
“It is costing the Victorian Government revenue … we hope there is a resolution so Victorian grain exports remain competitive,” he said.
The dispute is not the only problem for Victoria’s logistics system this season, coming on top of significant delays in grain movement on certain rail lines caused by State Government imposed speed restrictions on days above 33 degrees.