FREIGHT costs are hurting Australian competitiveness on the international market with a new report finding logistics are the largest single cost item in the production of many agricultural products.
Deloitte Access Economics investigated farm transport costs from paddock to port for a sector that sees about two-thirds of food and fibre exported.
The research analysed the freight costs facing Australian farms when moving commodities from farm to processor, port and/or domestic market and generated producer case studies from five major commodity groups, including beef, milk powder, canola, cherries and poultry, demonstrating the unique supply chains and costs involved in moving a range of commodities to market.
The beef case study of an operation at Dalby, Queensland, shows cattle are transported 240 kilometres by road to an abattoir in south east Queensland.
Frozen meat is boxed and palletised at the abattoir and loaded into a refrigerated shipping container, which is delivered 170km to Port of Brisbane by road and shipped 9,000km to South Korea.
The total estimated freight cost incurred in delivering one container of frozen beef to South Korea is A$7,380 (£4,029) – an average cost of about A$343 (£187) a tonne. The cost to deliver to port is A$2,720 (£1,485).
AgriFutures Australia managing director John Harvey, who commissioned the report, says freight costs are critical and will continue to impact agriculture’s export performance.
Freight costs are highest for grains at 27.5 per cent of gross income, and fruit and vegetables at 21 per cent.
Poultry, a domestic market, has the lowest farm freight costs at one per cent of
“The report shows Australia has comparatively higher freight costs for many key commodities compared to international competitors and it’s hurting our bottom line,” Harvey says.
“Strategic planning and regulatory framework are required to ensure infrastructure can be efficiently utilised by industry,”
National Farmers’ Federation chief ex-ecutive Tony Mahar says the supply chain research provides a benchmark of Australia’s performance and its ability to compete on agricultural transport costs at a global level.
“It is critical to look beyond the ‘now’ to consider future agricultural freight issues and to highlight possible options for potential improvement in transport infrastructure and regulation within the agricultural sector.”