Andrew Crane, managing director of Australia’s biggest grain exporter, CBH Group, has said Australia can’t assume it will be Asia’s food bowl in the future, with questionable infrastructure threatening the country’s ability to take advantage of valuable export opportunities.
According to AFR, Crane said rival nations were improving their productivity and lowering supply chain costs, allowing them to gain market share in Asia and the Middle East, whereas here in Australia, companies like CBH are struggling with increasing transport restrictions.
“Our natural freight advantage is not enough to guarantee Australia has a right to benefit from the Asian Century,” he said.
Crane added that some parts of Western Australia’s rail network were deteriorating to the point that CBH’s rail fleet can only use parts of the track at night.
A report commissioned by ANZ last year found Australia could double agricultural exports by 2050 to generate $700 billion in extra revenue, but investing in infrastructure would be critical.
“We have to earn it. We are seeing grain being shipped from South America in Capesize vessels. We are seeing Russia improving its grain quality and displacing Australian grain out of the Middle East and proving to be very competitive in to Asia,” Crane said.
CBH is Australia’s largest cooperative, owned by 4,300 farmers and is considering an expansion on the east coast as part of its efforts to compete with GrainCorp, which has also called for greater government investment in railways.
There’s also speculation CBH is considering an acquisition of GrainCorp after US giant Archer Daniels Midland had its bid to acquire the agribusiness knocked back by Treasurer Joe Hockey last year.
Crane said West Australian farmers have benefited enormously from an $175 million acquisition of new rail cars, boosting productivity and cutting prices for growers, but a decaying rail network, which is leased by the West Australian government to Brookfield Rail, is still a key concern.
“For varying reasons, the amount of capital going in to it is not enough to maintain it at an acceptable fit for purpose use,” Crane said.
A spokeswoman for West Australian transport minister Troy Buswell said the government had committed $352 million to upgrade rail and road infrastructure in the state’s wheat belt, but said Brookfield was responsible for the maintenance of the rail lines, and the future of the network was a commercial matter to be worked out between CBH and Brookfield.