Big beef over rail sale

AUG 2010

The sale of Queensland Rail (QR) not only threatens to take away long-term revenue from state coffers, but could also derail the city’s $5 billion beef processing sector and the farmers who work tirelessly to prop it. AgForce Cattle president Grant Maudsley tells Brisbane Business News how a loss of cattle freight rail services would put pressure on an already degraded regional network.

MY office in Western Queensland covers three properties totalling 50,000ha and while I may be far from the boardrooms of Brisbane, I check the ASX just like you – and my rain gauge.

What happens in the bush does resonate in the city and at the moment the sale of Queensland Rail is just as hot a topic at the Roma cattle saleyards as George Street. It means a lot to one of our nation’s most sustainable and relevant industries.

A growth industry must be founded on efficiency, viability, sustainability, capacity, integrity, relevance and innovation. Queensland’s beef industry, from remote cattle stations to southeast based transport, processing, marketing and distribution precincts, delivers all of these requirements.

But the efficiency and viability of beef production relies on the direction of QR services. To give you an idea of the importance of this industry to Queensland’s economy, beef production and meat processing contributed $9.5 billion in FY10, while statistics show that in the previous year we exported $3.1 billion worth of beef and veal to 79 countries.

We have 44 per cent of the nation’s beef cattle (11.7 million) and 56 per cent of feedlot capacity, making us Australia’s largest producer and exporter of beef. In greater Brisbane there are four major abattoirs with combined annual revenue of $5 billion – Swift Australia, Australian Country Choice, Stanbroke Beef and Teys Brothers.

In Queensland the sector employs 30,000 people on farms while 14,000 people work in the meat processing industry, which is Australia’s largest manufacturing industry. If these numbers aren’t convincing enough, I must emphasise that the industry is an innovator too, with on-farm technological innovations to increase productivity and profitability such as self-mustering systems, remote monitoring telemetry technology for water use, automatic drafting and stock handling systems.

But all this innovation and efficiency is redundant without the capacity to move product from farm to processor to port.

QR has shown a complete lack of business acumen in terms of recognising the benefits of, and opportunities for, expanding the cattle freight service. With increased awareness of road safety and fatigue issues, QR has an obligation to provide trains and lines to move agricultural commodities.

But the number and quality of loading and unloading centres for cattle freight has been whittled away for the last 30 years and with that we have also lost many of our rail slots to the resources sector.

Last month QR proposed an immediate 12 per cent increase in cattle freight charges with minimal industry consultation, claiming its regional livestock network is losing $20 million a year and the fee hike is necessary for this service to remain sustainable. Minister for Transport Rachel Nolan said it will be phased in over three years.

This means graziers will need to weigh up which transport option is the most cost-effective for them and will likely therefore rely increasingly on road transport to move livestock, which could lead to cattle rail freight closing completely.

If the State Government continues down the path of reducing agricultural rail, it will intensify pressure on federally-funded roads with the cost borne by all taxpayers. Losing rail would see an additional 5200 road trains go off rail and on to regional roads.

The entire 347,000 head of cattle transported by rail will be put onto roads and into our cities, with a serious reduction in social amenities for local residents. It will exacerbate stress on the already degraded and congested regional network, increase safety concerns for all users, raise fatigue management issues for drivers and impact on the quality of beef.

My concern is that if the current Queensland Rail ownership is taking backward steps to provide adequate infrastructure for this important export industry, what will be the interest for the privatised entity?

Regardless of who the successful bidder is for QR, they must recognise that the ramifications from their decisions will reverberate through agriculture to the urban business community.

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