FOOD BOWLALIGNMENT Inland Rail

The Food Bowl Inland Rail Alliance

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Urgent need to reconsider the Inland Rail route alignment

Melbourne - Brisbane Inland Rail is a once in a generation opportunity to transform the movement of goods in eastern Australia, not only to consumers within the major capital cities, but growing export markets around the globe.

Whilst strongly supportive of the Inland Rail project, the Food Bowl Inland Rail Alliance (FBIRA) is adamant that the selection of the Albury-Wagga route is flawed because the 2010 study options evaluation was based on capital cost and travel times only.

In 2009, potential Inland Rail route alignments were considered by consultants advising the ARTC culminating in the 2010 Melbourne-Brisbane Inland Rail Alignment Study. That study did not adequately consider:

- the massive rail-contestable export demand from the Food Bowl region, including the greater opportunity for competition between export gateways.

- improvement to national freight network reliability and resilience and provide greater security of logistics chains.

- the benefits that the creation of a true network will create for the freight rail industry.

- reduced operating costs through shorter route length and transit times, and lesser gradients and curvatures.

- the opportunities to maximise the use of existing intermodal and rail corridor infrastructure.

- the wider externality benefits that will be derived through attracting more freight from the Food Bowl to rail, in particular reduced road damage costs borne by local government.

We believe our submission clearly demonstrates the strategic benefits that should be evaluated further before Ministerial sign-off on the project. Further analysis of the route options should be undertaken and should include:

- Broadening route selection criteria to encompass the commercial and economic upside available to the project through harnessing regional export demand.

- Industry stakeholder engagement, supply chain analysis and agricultural production forecasts.

- Further assessment of the capital costs required to construct the Food Bowl Route and consider value engineering of this option.

We request that the Minister defer his decision on the Melbourne to Parkes alignment of Inland Rail until further options analysis is undertaken. This will not negatively impact the timing of construction of the Parkes to Moree and Moree to Brisbane sections of Inland Rail which we believe should proceed as soon as practicable.

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The Food Bowl Inland Rail Alliance (FBIRA) represents the local governments of Mitchell, Greater Shepparton and Moira in Victoria, and Berrigan, Jerilderie, Urana, Griffith, Leeton and Narrandera in NSW. The Alliance has been formed with the sole aim of ensuring the Australian Government gives proper consideration to routing the Melbourne to Brisbane Inland Rail project through one of Australia’s most economically diverse regions.

The region covered by the FBIRA is home to a broad range of agricultural commodities produced and processed for consumption in both domestic and international markets. With growth since the initial Inland Rail alignment studies much stronger than forecast, the region’s export potential is set to boom driven by the recent free trade agreement with China and the growing middle class in our Asian trading partners. The region has also seen massive private sector investment in value adding industries in the regional centres of Seymour, Shepparton, Griffith, Tocumwal, Leeton and Narrandera.

The Food Bowl Route is essential for unlocking the economic prosperity in Australia’s agricultural powerhouse. The Australian Government must defer a decision on the preferred alignment for Inland Rail and undertake further route options assessment.

In making this submission, the FBIRA has consulted industry widely across the nine local governments represented as well as neighbouring municipalities and the Victorian, New South Wales and Queensland Governments and the Port of Brisbane Corporation. The FBIRA is strongly supported by the extensive network of producers, value adding processors and suppliers within the region.

The Food Bowl Inland Rail Alliance

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Melbourne-Brisbane Inland Rail has rightly been championed by the Australian Government as a key piece of national infrastructure. This project will dramatically increase the efficiency and productivity of Australia’s freight rail industry resulting in a more competitive inter-capital freight transport market.

However Inland Rail can be much more. If the Food Bowl Route alignment is built, the project can also unlock unprecedented economic growth and productivity gains through Australia’s major agricultural heartlands, well beyond the inter-capital demands. With more detailed options analysis and foresight we can link some of our most innovative and diverse regional producers with domestic markets in our burgeoning cities, as well as the massive export market potential in Asia and beyond.

Inland Rail has the potential to deliver unprecedented economic growth and productivity gains through Australia’s major agricultural heartlands, well beyond the inter-capital freight markets. Whilst strongly supportive of the Inland Rail project, FBIRA believes that the Australian Government should undertake more detailed route options analysis to assess the considerable benefits that an alignment through the Food Bowl will bring to the project.

A project of national significance

The ARTC’s 2010 Melbourne-Brisbane Inland Rail Alignment Study recommended a route through southern NSW via Albury, Wagga Wagga, Junee and Cootamundra. Selection of the route was based solely on capital cost and journey time between Melbourne and Brisbane.

The FBIRA supports a more westerly alignment, passing through Shepparton, Tocumwal, Jerilderie, and Narrandera. We believe this “Food Bowl Route” will:

- provide greater opportunities for access to agricultural export markets, particularly through rail connection to the Port of Brisbane, as well as the Port of Melbourne, Port Botany and Port Kembla.

- improve national freight network reliability and resilience and provide greater security of logistics chains.

- reduce operating and maintenance costs through shorter route length and transit times, and lesser gradients and curvatures.

- maximise the use of existing intermodal and rail corridor infrastructure.

- minimise externalities from road freight, particularly road damage costs borne by local government.

- broaden the commercial agricultural opportunities between the states.

The Food Bowl route benefits

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Dairy – The region produces over 20% of Australia’s dairy output, contributing approximately $4.3 billion to Australian GDP and directly employing around 10,000 people.

Grain – In 2012-13 the region produced $3.8 billion in broad acre crops—over 20% of Australia’s total supply. Substantial volumes of feed are also imported into the region.

Livestock – Production within the region was valued at almost $1.5 billion in 2012-13. This growth will continue in line with the expanding Asian middle classes and recent free trade agreements. The Riverina Beef processing plant near Leeton process 30-40 refrigerated containers of beef per week.

Wine – The Food Bowl is home to major producers De Bortoli Wines, McWilliams and Casella Wines. Casella Wines is responsible for 27% of Australian bottled table wine exports, including over 12.5 million cases per annum of the iconic Yellow Tail brand to 50 countries.

Cotton – Production around Griffith and Leeton has expanded rapidly with the value of exports from southern NSW reaching around $150 million in 2012-13.

Fruit and Vegetables – In 2012-13 the region produced around 45% of Australia’s fruits. Vegetable production is worth over $400 million for the region. Citrus production is Australia’s largest fresh fruit export, with the Riverina producing 180,000 to 200,000 tonnes annually worth $98 million. The Berri juice factory at Leeton processes 70,000 tonnes of citrus fruit annually.

Rice – Rice production in Australia is located almost exclusively within the Food Bowl region, with 1,500 growers producing up to 1 million tonnes and generating annual revenues over $800 million. SunRice employs over 2,000 people and exports to over 60 countries.

Tree Nuts – The value of almonds and walnuts grown in the region is over $1.2 billion annually and is expected to grow by over 30% to 2025 with exports accounting for 75% of production.

Timber – Grants Sawmilling in Narrandera produces flooring, cladding and structural timber and exports to Japan.

Fertilisers – The back-haul transport of fertiliser is intrinsically linked with agricultural production and poses a significant opportunity for freight rail.

Unlocking economic prosperity in Australia’s agricultural powerhouse

The Food Bowl region is home to almost 175,000 residents and produces over $10 billion of the nation’s agricultural produce. This represents a 50% increase in the value of production since the Inland Rail study was undertaken in 2009. With some industries exporting up to 80% of their production, local producers and processors rely on efficient transport options between farm, plant and port.

The variations in geographic and climatic conditions across the Food Bowl, coupled with extensive irrigation infrastructure, means the region is home to a vast array of primary produce. As the region continues to evolve, producers are adapting and diversifying into new crops.

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This snapshot of the region demonstrates phenomenal recent growth, well above the assumed annual growth rate of 2.2% assumed as part of the 2010 ARTC study. Increasing exports to Asia have played a key role in this growth. Further growth is expected with the recent Free Trade Agreements (FTAs) signed with Korea, Japan and China expected to boost demand for Australian produce. In particular, Dairy, Livestock, Wine and Cotton exports are expected to boom with tariff reductions under the China Free Trade Agreement of between 15 and 25% for these commodities.

The clear potential for export growth will underpin increased demand for landside freight access to efficient and competitive ports, with Melbourne and Brisbane ideally located for export supply chains from the Food Bowl Region. Increasing food production requires efficient supply chain infrastructure that both delivers our products to domestic and international markets and brings in essential inputs such as fertilisers, fuel and packaging.

The 2010 ARTC study was dismissive of network benefit driven demand from the NSW Riverina determining that it was insignificant relative to other flows. However, the Food Bowl Region already generates nearly 70,000 containers of intermodal freight per annum destined for the Port of Melbourne, despite the inadequate rail infrastructure.

Deniliquin – 15,000 containers per year of rice with services 6 days/week.

Tocumwal – 10,000 containers per year of hay, grain, rice, cottonseed and dairy running 3 days/week.

Mooroopna – 3,000 containers per year of cottonseed attached to the Tocumwal train.

Griffith/Leeton – 40,000 containers per year of grain, rice, wine, grapes running 5 days/week.

There are currently 25 active grain receival sites within the Food Bowl Region owned and operated by numerous enterprises. Many of these terminals will take advantage of gauge standardisation and access to alternative export ports at Geelong, Melbourne and Kembla.

An Inland Rail alignment via the Food Bowl Route will further increase rail modeshare from the region by:

- reducing operating costs.

- inducing more frequent services.

- providing real competition between the export gateways.

- optimising supply chains for products destined for domestic markets in Brisbane and Sydney.

- capturing commercial agricultural trade importunities between the Goulburn Valley, Riverina and Darling Downs. Such opportunities include livestock and feedstock movements across borders depending on seasons and gypsum transported north.

Capturing regional demand

The diversity and sheer volume of commodities produced in the Food Bowl leads to year-round freight transport demand which, coupled with the distances to our capital cities and export gateways, is ideally suited to an efficient intermodal rail system. The Australian Government has the opportunity now to select an alignment that best captures the huge contestable volumes available through the Food Bowl Route.

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Walnuts Australia – $11 million processing plant in Leeton

Casella Wines – considering a second processing line, doubling capacity at their Yenda facility

Casella Wines has also formed the Australian Beer Company in a joint venture with CC Amatil, with production expected to exceed 500,000 hectolitres (15% of Australia’s beer market) at their Leeton brewery

Since purchasing Riverina Beef plant and feedlot in 2010, JBS Australia has added a 600 per day processing capacity that is fed purely by the adjoining feedlot that has a carrying capacity of 53,333 head

Agri Australis – $70 million investment in a 1 million tree hazelnut plantation in Narrandera creating 34-full time jobs. The company is also investigating development of a processing plant for value adding

Campbell’s Soup – $5 million in new plant, securing 250 full-time jobs in Lemnos

Coca-Cola Amatil – $78 million invested in Shepparton cannery

Pactum Dairy Industries – $40 million in an export focussed UHT facility with 52 extra full time jobs

GrainCorp Oilseeds – $35 million upgrade to its processing facility at Numurkah

Australian Meat Group – $50 million to revitalise the Deniliquin meat processing facility, generating 450 jobs

Tatura Milk Industries – $7.8 million expansion of facilities at Australia’s largest domestically-owned infant milk formula producer

Pental Soaps – the makers of White King cleaning products – relocating their Port Melbourne production to Shepparton along with 100 additional jobs

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CASE STUDY

Casella Wines

Casella Wines, producer of the global wine label Yellow Tail, is based just outside of Griffith. Their extensive premises are responsible for processing 160,000 tonnes of Australia’s best wine grapes annually to produce around 12.5 million cases of wine for distribution across 50 countries. The current production line is capable of bottling, boxing and palletising 36,000 bottles per hour. Two more production lines are being considered which would increase capacity to 65,000 bottles per hour.

This huge production volume feeds a growing export demand, with exports accounting for 85% of the $344 million annual revenue reported in 2013. Casella Wines is responsible for 27% of Australian bottled table wine exports. This results in almost 13,000 TEU being shipped by rail annually from the Griffith Intermodal Terminal to the Port of Melbourne for exports. The single rail route to the Port of Melbourne reduces the fragility of the supply chain and leaves the company reliant on road transport for most of its freight movements.

Empty bottles are delivered by truck from Adelaide, while the company receives 10% of Australia’s grape production from both local and Australia wide sources via road freight movements. This places extensive pressure on the local road system as well as imposing safety burdens on local communities. An inland rail option within the region would increase transport options for the region, reduce the impact of heavy vehicles on the local communities and allow businesses to benefit from competition across ports.

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Private Sector Investment in the Food Bowl

Businesses in the region are investing heavily to ensure the Food Bowl meets the growing world demand for top quality food and agricultural products. This investment will deliver real income and employment growth to the region.

Food manufacturing and processing industries have developed around the local agricultural bounty, creating value added products including dairy, meat, processed nuts, oils, wines and milled grains for export and domestic consumption.

Over the past five years, the private sector has demonstrated its confidence in the bright future of the Food Bowl by investing over $1.0 billion in food processing and other manufacturing.

The Food Bowl is a hub for processing product from other regions, driving demand for packaging materials, processing consumables, and specialised plant and equipment. There are considerable economic flow-on effects for supporting industries such as mechanical and construction services.

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Enhancing our national freight network

The strategic advantages of the Food Bowl Route to the Inland Rail project can be summarised in four key points:

- it maximises regional rail freight demand potential, without compromising inter-capital demand.

- it will transform Australia’s interstate rail system into a true network, providing substantial reliability and resilience benefits to all east coast rail customers.

- it makes productive use of existing underutilised or abandoned rail corridors and intermodal terminals.

- it will reduce operating costs through shorter route length and transit times, and lesser gradients and curvatures.

Maximising opportunity for rail freight

Customer demand preferences mean that interstate freight rail between Melbourne and Brisbane is dominated by high demand for peak train paths and almost zero off-peak demand. Every rail operator competes for train paths that leave Melbourne after 6pm to arrive in Brisbane in the morning three days later and vice versa. Although this is a competitive market, it is very inefficient.

By tapping into the huge export potential along the Food Bowl Route, rail operators can schedule additional services destined for export gateways in the off-peak periods. The Food Bowl offers the consistent volumes, distances and scale needed by freight rail to be commercially and economically viable.

Similarly, packaging and other inputs into the Food Bowl’s processing centres will open opportunities for intermodal freight from across the country including Adelaide and Perth via the network intersection at Parkes.

This will not only better utilise the railway, it will also provide greater revenue streams through access charges.

For the Food Bowl’s producers and manufacturers, the Food Bowl Route will provide greater competition and lower prices for land transport making our produce more competitive in international markets. Similarly, it opens up the opportunity for true competition between the east-coast ports.

“The Melbourne—Brisbane Inland Rail Project is a unique opportunity to get the right infrastructure in place to generate regional growth and wealth for Australia.

This is not just about updating the present railway system based on what we’re doing today; it is a nation building project that requires long term vision for what we want to be doing tomorrow.

Our objective here should be to increase productivity, lower the cost of doing business and give future generations the ability to compete by exporting into an increasingly competitive world. We need to let that guide our decision making rather than assessing route alignment solely on least cost or narrow engineering criteria that are really only about making our system ‘fit for today’.

If we get that vision right, then we will be able to open up new opportunities and keep growing the economic pie. If we don’t, then we’ve missed the point in doing such a project and future generations will judge it a costly failure.”

Col Rees, 40 year freight rail industry veteran and owner of the Ettamogah Rail Hub

Better use of existing infrastructure

Rail cannot operate in isolation. It relies on complementary investment in road and intermodal hubs to provide the connections to the farm gate. With existing intermodal terminals located at Griffith, Leeton, Tocumwal and Deniliquin, and a proposed facility at Mooroopna, the Food Bowl is well serviced with infrastructure that will complement Inland Rail.

Easements already exists for much of the Food Bowl Route alignment, with entirely new track construction only required between Finley and Jerilderie, and potentially Narrandera and north of Caragabal.

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Reduced operating costs

The Food Bowl Route will reduce operating costs through shorter route length and transit times, and lesser gradients and curvatures.

Converting the Mangalore to Tocumwal line to standard gauge will provide significant operating benefits to the rail industry. With all of Victoria’s North East converted to standard gauge, rail freight operators will be able to move rolling stock quickly and efficiently between lines, reducing costs and providing superior levels of service to customers.

Creating a national freight rail network

For the freight industry, reliability is often more important then transit time and cost. The lack of alternative routes on the rail line, because it is not a true network but just a chain of single lines between cities, means that the interstate railway has little resilience when there is an incident and long delays are not unusual. Consequently, derailments or breakdowns on the interstate network are often cited by freight forwarders and cargo owners as a reason for selecting road over rail.

The Food Bowl Route provides resilience in the network: if an incident occurs on one route between Mangalore and Parkes, trains can be rerouted via the other. This flexibility also makes scheduling and delivery of maintenance works less time sensitive.

Longer term, the Food Bowl Route will be an enabler for further national freight network enhancements including re-instating the Hillston–Roto rail line. The Hillston Roto link will provide an alternative connection between the Inland Rail and the main East West line through to Broken Hill and the west.

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