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Report on Transport of Grain

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Report on Transport of Grain VICTORIA VICTORIAN TRANSPORT STUDY REPORT ON TRANSPORT OF GRAIN Ordered by the Legislative Assembly to be printed F. D. ATKlNSON, GOVERNMENT PRINTER MELBOURNE 1980 No. 32 VICTORIAN TRANSPORT STUDY The Honourable R.R.C. Maclellan, M.L.A., Minister of Transport 570 Bourke Street MELBOURNE, Vie. 3000 Dear Mr. Maclellan, I have the pleasure to submit herewith a report on Transport of Grain. This is one of a series of reports being prepared to make known the results of the Victorian Transport Study. Yours sincerely, W.M. Lonie TRANSPORT OF GRAIN CONTENTS Summary 1. Introduction 2. Submissions 3. The Australian Wheat Board's Submission 4. The Grain Elevators Board's Submission 5. The Victorian Railways Board's Submission 6. Other Submissions 7. Bureau of Transport Economics Report, 1978 8. The Transmark Study, 1980 9. Comment and Discussion 10. The Alternative - A Coordinated System 11. Conclusions 12. Recommendations Appendices SUMMARY The total transport task of carriage of grain from farm to final customer is probably the most costly segment of the total grain business. The transportation and handling of grain in Victoria is only part of the total transport task in carrying grain from the growing areas of Victoria and adjacent areas such as the Riverina region of New South Wales to the principal overseas markets, The transportation of grain within Victoria and through Victoria is the most important freight task carried out by the Victorian Railways Board, both as to tonne kilometres hauled and as a proportion of avoidable costs involved in the railways operations. Total costs involved in transporting grain by rail within Victoria and from the Riverina area of New South Wales are not being met from freight charges, the result being that the people of Victoria are subsidising the transport of grain, hauled on the Victorian Rail System, irrespective of origin or destination through the revenue supplement. Furthermore, as no provision is made in freight charges covering capital charges and depreciation factors, there is very little, if any contribution by the grain industry to overhead costs involved in maintaining the Victorian Railways system. There is a continuing need for the provision of modern facilities for the transport of grain on the Victorian Railways system, and for investment in roads in the grain growing areas, in order to ensure that grain growers can continue to be competitive in international markets in the light of competition from other sources. Because of volumes involved, grain appears to be the only bulk commodity of significance which could justify substantial expenditure on a modernisation program of transport and handling facilities within the State, by the State Authorities responsible, viz. The Victorian Railways Board and the Grain Elevators Board of Victoria. Unless funds are made available to ensure that the Victorian Railways Board and Grain Elevators Board systems are modernised, the carriage of grain will largely transfer to road. ' .. 1. 1. INTRODUCTION 1.1 A number of studies have been made into economic aspects of grain transport within Victoria and Australia, by expert authorities, in particular aspects of the grain ' and transport industries, 1.2 Studies have also been made by a number of Government organisations, including the Bureau of Transport Economics of the Commonwealth Department of Transport which published a paper entitled "Transportation of the Australian i4heat Harvest", in 1978. 1,3 In its report, the Bureau suggested redirection of the wheat harvest to closest port irrespective of State of origin, which had the effect of directing of a large proportion of RiverinaN,S.\.J. grain to Geelong and Portland. The Bureau recognised that rail freight charges would need to cover "avoidable costs", and that there could be shifts in rail revenues and revenue supplements. 1.4 The most recent study of the Victorian grain transport task was commissioned by the Minister of Transport, and carried out by Transportation Systems and Market Research Limited of London (Transmark) in early 1980, to ascertain the costs incurred by the Victorian Railways Board, and the relationship between those costs and the freight charges made, in carrying out the task of transporting grain throughout Victoria. 1.5 The study concluded that the grain industry was not meeting the avoidable costs of carrying out the task of carriage of grain by rail. 1.6 The evolution of the grain industry in Victoria and adjacent States was closely connected with the radial development of the rail system from Melbourne, the Capital and the principal Port of the State, in the last two decades of the 19th Century. As a result, the familiar pattern of railway line development continued into the 1920s in the era of horse dravn harvesting methods and grain collection, and delivery by horse drawn wagon to rail sidings up to a maximum distance of the order of 20 to 25 km away. 1.7 In the late 1930s and thereafter, the location of storage and collection facilities of the Grain Elevators Board of Victoria at the 250+ rail sidings installed to cater for horse drawn traffic preserved all the problems relating to the scale of operations of the 19th Century labour intensive farming and transportation activities, 2. 1.8. Of particular relevance to the study of transport of grain in the 1980s is that, although the need for modernisation of farming methods and grain handling has been recognised by the farming community, the storage and handling authority, the Victorian Railways Board, 'and the many Government and semi-Government authorities directly .. and indirectly involved over the past 50 years, only certain aspects of these tasks have been the subject of capital investment and modernisation. ' 1.9 The overall concept of the handling and transportation task related to the grain industry still largely remains as in the 19th Century. 1.10 Very little farm storage is provided, the distance from farm to receival silo remains the same, the means of providing, shunting, loading and assembly of rail wagons for the line haul task remains unchanged, and the limitat~ons imposed upon the use of road transport reflect all the regulatory aspects of the control over road transportation instituted in the 1930s. 1.11 The area which is served by the Victorian transport system, extends far beyond the geographical boundaries of the State. 1.12 The distance from which grain is transported to markets within Victoria, and for export, is a somewhat artificial boundary, being based on the freight and handling charges which pertain to grain movement within the State. 1.13 At the present time, rail freight charges made for the transport of grain by rail do not cover the total costs involved in providing that service, a feature which tends to distort the nature of the transport and handling tasks, and the level of revenue supplement provided by the people of Victoria to maintain railway services. 1.14 The Board of Inquiry into the Victorian Land Transport System recommended that railway charges should be revised to cover total costs, and to include provisions for capital charges and allowances for depreciation, and that the Victorian Railways Board should concentrate on the tasks for which it is best suited in the matters of provision of capital and modernisation of its facilities. 1.15 However, this has not been done, and it is unlikely that the Victorian Railways Board could provide the • necessary services in the grain transport task, at costs on a fully allocated basis, which would be competitive vith alternative transport methods now available within Australia. 3. 1.16 Some parts of the grain transport task, such as collection or gathering wheat from closely spaced lov capacity country silos, and delivery of small parcels of grain to local consumers by rail, are grossly inefficient, and should be replaced by road transport as soon as possible. 1.17 The marketing and growing conditions pertaining within the grain industry, and the resultant transport and handling tasks, are diverse, and subject to involvement of far too many authorities concerned with their own responsibilities, but with apparent less concern with the need for cooperative coordination in the interests of minimum costs of operation and maximum returns to the grower. 1.18 In other words, there is a need for coordinated commercial management of the total transport task, preferably independent of·the authorities basically concerned with variou~ statutory and administrative responsibilities relating to various parts of the task. 1.19 Advantages could accrue to the State through the re-development of the State's grain transport and handling facilities with the object of reducing the costs involved in those tasks, and consequential expansion of the area served, by a modernised cost effective State transportation and handling system. 4. 2. SUBMISSIONS 2.1 Principal submissions regarding the transport of grain have been received from the Australian Wheat Board, the Grain Elevators Board of Victoria, Victorian Railways Board, Farmers & Graziers Association groups, coordinating groups such as the Marmalake Zone Receival Committee and the Eastern Mallee Committee, and the Professional Transport Drivers' Association of Australia, Several other organisa­ tions and individuals also made helpful submissions. 2.2 In addition, the Study Group has had detailed discussions with several of those who made submissions, and with other interested parties. 2.3 A list of those who made submissions and/or had discussions with the Study Group is included in Appendix 1. 2.4 Because of the significance of the submissions from the Australian Wheat Board, the Grain Elevators Board , and the Victorian Ra i 1 Ill ay s Board, each of the m is discussed in some detail in the next three sections of this report. Discussion on the remaining submissions then follo111s. 5. 3. THE AUSTRALIAN WHEAT BOARD'S SUBMISSION 3.1 The Australian Wheat Board advised that it is "a body corporate established under the provisions of the Common111ealt.h IJheat Marketing Act 1979 (No.l66 of 1979) and complementary legislation extant in all States.
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