Agri-Transportation Cost and its Impact on Australian Farming
12 April 2023Agriculture is an important export business for Australia, accounting for around two-thirds of the country’s total food and fibre exports to markets outside of Australia. In line with the megatrends that Australian researchers have identified, it is anticipated that over the next 20 years, the global population will continue to rise, increasing the demand for food worldwide. This will result in new growth opportunities for the export of Australian produce.
What The Data Tell
The most efficient routes for transporting food and fibre from the field to the port are among the most important factors in determining whether or not Australian agriculture can realise its full potential. Case studies show that logistics may account for as much as 48.5% of total farm-gate costs. This percentage is much higher than any other single cost factor in the production of many agricultural sectors.
It is essential to accurately measure Australian farmers’ competitiveness and identify the areas in which pinch spots and bottlenecks hamper the transport of agricultural commodities. Farmers need to know how much they spend transporting their produce to consumers. It is also vital to look beyond the “now” to consider future agricultural freight issues and highlight possible options for improving transport infrastructure and regulation within the agricultural sector.
Agri-Transporting; Today
There is a wide range of variability in the costs associated with transporting agricultural products, which is reflective of the roles that factor such as perishability, weight, volume, labour intensiveness, and geographic distribution play in determining the total cost of transporting agricultural products.
An analysis of farm freight costs, which include moving commodities to and from agricultural properties and off-site storages, as a share of the Gross Value of Farm Production (GVAP) demonstrates the proportion of attributable costs to freight for each major commodity within the sector. In Australia, grain, fruit, and vegetable freight costs are generally the greatest since these two categories account for 27.5% and 21% of GVAP, respectively. Compared to other farm produce types, poultry has the lowest relative farm freight costs, with a total of 1% of GVAP. This is because poultry supply networks are more centralised.
Agri-Transporting: In The Future
In addition to a review of previous data, this study investigates how changes in agricultural output are expected to affect the size of future freight demand. This is done by looking at how these changes could affect the size of future freight demand. The sector needs to improve and innovate freight transport procedures since the expected annual freight job involves 3.3 million vehicle movements and roughly 400,000 rail carriages. The output of the vast majority of important commodities is expected to rise by 2027–2028. The distribution of agricultural products to various markets will continue to be supported by freight services throughout the regions, catering to both the home and international markets.
The following is a list of some of the elements that are expected to have an impact on the future of agricultural freight:
- Increasing prices of inputs, most notably labour and the cost of gasoline;
- Advancements in technological capabilities; and the
- Variations in the amount, seasonal variability, and geographic position of agricultural and livestock output result from climate variations.
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