Fix freight woes, fix productivity: GrainCorp’s bold challenge

The agribusiness giant says lessons from one of the nation’s most productive industries can help get the economy moving again.

Agriculture is one of the nation’s most productive industries, but poor road and rail infrastructure is holding it back. Picture: Zoe Phillips

One of the nation’s biggest agribusiness operators has urged an overhaul of freight infrastructure, particularly rural roads and rail, as a rapid-fire way to help boost flagging productivity.

Wheat and grains major GrainCorp has also called for the streamlining of fragmented environmental and trade regulations as a way to slash compliance costs and spur investment into regional Australia.

The comments were made as part of GrainCorp’s submission to Treasury ahead of the Albanese government’s Economic Reform Roundtable next month. Inefficiencies in freight and logistics infrastructure; a lack of investment in rural roads; short rail sidings; and port congestion all slows the nation’s agriculture supply chain and result in significant costs for growers and exporters each year.

GrainCorp chief executive Robert Spurway. Picture: Luis Enrique Ascui

Australian grain freight costs are more than triple those in countries such as Canada and Ukraine, placing pressure on farmgate prices and export competitiveness, GrainCorp said in its submission.

“These cost pressures are compounded by ageing infrastructure, inconsistent investment and limited interoperability between state networks. With global demand for reliable, low-emissions supply chains increasing, Australia cannot afford to let poor infrastructure remain a barrier to growth in regional industries like agriculture,” it said.

GrainCorp markets and ships grain on behalf of 10,000 growers across Australia. Combined sales of wheat, barley and sorghum represent the nation’s biggest agriculture exports.

GrainCorp chief executive Robert Spurway said agriculture has been one of Australia’s most reliable productivity engines.

“In the grains industry, growers have embraced innovation and continuously adapt to volatility in weather, markets and politics – all while driving more value from every hectare, every tonne, every season,” he said.

“Our message to the government is to let agriculture be an example for other sectors, and to build on that success.”

Andrew Harding, the chief executive of rail freight operator Aurizon, recently told The Australian there’s next to no benefit for freight in building high-speed rail, rather a better investment for taxpayers would be to making the nation’s existing – but ageing – rail infrastructure more resilient.

Financial regulators have become increasingly concerned about Australia’s low productivity growth over the past decade. This is starting to weigh on Australia’s supply capacity, putting a drag on the potential output of the economy and hurting wages and income over the long run.

GrainCorp’s submission also says there’s a big opportunity for rural Australia in developing a homegrown sustainable aviation fuel and renewable diesel industry here, which would use domestic feedstock such as canola, tallow and used cooking oil, ingredients that are exported for others to develop their own fuels.

Wheat and canola are among Australia’s biggest soft commodity exports. Picture: Zoe Phillips

GrainCorp is already working with fuels giant Ampol and industry funds-backed IFM Investors in trialling a domestic renewable fuels industry. The potential of the industry is significant, with estimates from the Clean Energy Finance Corporation that Australia could develop a $36bn industry targeting renewable aviation and long-haul fuels.

“Australia is well-placed to become a global leader in renewable fuels, with a reliable feedstock base and strong existing infrastructure. But without policy action, we risk continuing to export raw materials while importing finished fuel – missing the opportunity to capture downstream economic and emissions-reduction benefits,” GrainCorp said in its submission.

At the same time, there’s a quick fix for the nation in streamlining often conflicting or overlapping regulations. Even low-impact infrastructure, such as grain siding upgrades or storage expansions, is often delayed by overlapping state and federal environmental approvals.

Reforms in these areas would reduce compliance costs, speed up project delivery, and attract investment in regional infrastructure, GrainCorp argued.

As well as the Treasurer Jim Chalmers’ upcoming roundtable, the nation’s Productivity Commission has been running a review into how to spur on productivity. This review has been split into five key research areas, with the first interim report – Creating a more dynamic and resilient economy – scheduled for release on Thursday.