08-05-2025
Shipping costs hinder grain being sent to drought-affected farmers
A West Australian grain exporter says it is cheaper and safer to send Australian grain to China than to drought-hit farmers in states such as South Australia.
Livestock farmers grappling with an ongoing drought in SA are running short of feed and are looking to source grain and fodder from other states.
But Perth-based 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.
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, when you only have 100mm of rain for the whole year last year, the feed now is pretty well non- existent," he said.
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 cost of freighting in 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 seem 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 nowhere and you just want stuff to rock up in bulk, a bit of support for some freight subsidies would be appreciated, if not needed."
Mr Orr said he had received enquiries for grain to be sent east and he wanted to assist, but he couldn't make the numbers work.
He said crew costs, and Australian port container booking charges and the risk of exorbitant fees if a container arrived to the wharf an hour late, made it unviable.
"Plus you still have to pack the product and then you have got to get anthracnose testing done because of interstate quarantine requirements, those containers get locked up while you're doing the tests, there's a lot of risk involved," he said.
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 a number of 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."
After floods cut railway lines in 2022 the WA government formed a shipping and supply chain task force to examine the shipping industry and supply chain links between WA and interstate and international customers.
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.
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.
"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.
