FTA requires rail upgrade

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Stock Journal --> FTA requires rail upgrade

FARMERS and agriculture executives have warned there will be little benefit from a free trade agreement (FTA) with China unless railways carting produce to ports for export are urgently upgraded.

National Farmers' Federation (NFF) chief executive Simon Talbot said the nation's supply chain was inefficient, driving up costs for farmers that could leave them uncompetitive as other nations strike similar deals with China over the next five years.

If things don't change, the influential lobby group is prepared to make it a key issue at the next federal election.

"Frankly the thing I would hate to see is infrastructure costs go up, energy costs go up and the FTA advantage is just lost," Mr Talbot said.

"That can't occur. We have to be globally efficient."

Mr Talbot said between $5 billion and $7 billion was needed to be spent upgrading and rebuilding eastern Australia's rail freight network.

He said the money did not have to come from government coffers because there were private investors and superannuation funds looking to invest in stable infrastructure.

The government needed to step in to facilitate, not hinder, deals, Mr Talbot said.

"Otherwise come the FTA in other countries, the Chinese are like the rest of us, they are going to be shopping around and that's why we need to start (investing) now," he said.

"We have a five-year head start over Brazil, Argentina and probably Canada in terms of an equal FTA with China and frankly, from what I have seen we need to spend that time getting our rail infrastructure up to speed and globally competitive," Mr Talbot said.

The nation's biggest grain handlers have been battling against deteriorating state-owned railways for decades.

Transporting grain to ports strips about one-third off the price farmers earn on each tonne of grain they sell.

On the west coast, some grain can only be transported at night because part of the rail network buckles in the summer heat while along the east coast just 10 per cent of rail sidings are large enough to handle 40-wagon trains.
Time for some action

GrainCorp chairman Don Taylor has been urging governments for most of the year to invest just $75 million to improve the rail sidings, which the company believes will save growers $5 per tonne.

In other words, based on an average east coast crop, the pay-back on the investment is just one year.

Mr Taylor says he's fed up with discussing the merits of the business case and wants action.

"I've had some really encouraging words but now it is time for some action," he said.

Mr Taylor said the rail upgrade could start immediately and be completed within three years.

Overhauling the entire rail network would take a decade, he said.

"We've had green papers, white papers, blue papers, yellow papers," Mr Taylor said.

"Enough papers. We need commitment to action."

Mr Taylor said the FTA would increase demand for Australian produce but it would not be "transformational" for farmers because it was unlikely to generate higher farmgate prices.

While wheat was excluded from the FTA, Mr Taylor said the broader issue for the nation's agricultural sector following the FTA was making farming more profitable in order to stimulate production.

"Our problem in Australia is a lack of production. That's all to do with costs," Mr Taylor said.

"If we take the logic that international prices are going to be whatever they are whether it be China or not, we have to look at making our supply chain more efficient."

Donald McGauchie, chairman at the nation's biggest beef producer, Australian Agricultural Company, has also warned transport infrastructure must be improved for the nation to truly benefit from rising demand.