Viterra signs $100m rail deal

Viterra signs $100m rail deal

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Rail lines will be used to transport grain on the EP for at least another three years, and in the Mid North and Upper South East for at least the next five years.

Rail lines will be used to transport grain on the EP for at least another three years, and in the Mid North and Upper South East for at least the next five years.

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THE future of grain transport by rail in the Mid North, Upper South East and EP has been secured under a $100m Viterra deal.

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THE future of grain transport by rail on Eyre Peninsula, in the Mid North and Upper South East is secure for the foreseeable future after Viterra and rail operator Genesee & Wyoming Australia signed a long-term agreement worth more than $100 million.

The deal covers a five-year period for lines in the central and eastern regions - encompassing the rail lines to Port Pirie, Jamestown, and Wolseley - and a three-year term for EP railways, both with options for extension.

Viterra general manager - operations Tim Krause said the agreement represented one of the largest investments in the rail network for the grain industry, and demonstrated the company's commitment to graingrowers and exporters.

"This gives growers certainty around providing capacity to get their grain to the port," he said.

"We're also very keen to make SA as attractive as possible for exporters to come and do business, and the reason for that is, the more attractive they find SA, the more they operate here and that gets reflected back to growers in competition for their grain."

He said shorter duration of the EP deal was based on the condition of the region's rail network.

"On Eyre Peninsula, I think it’s well-known that the infrastructure there is going to require significant investment," he said. "We’ve signed on for a three-year period, but beyond that there is going to be a need for significant investment in that infrastructure to maintain it as a efficient option for moving grain from upcountry to the port.

"(This) gives the relevant stakeholders time to discuss how we operate those lines beyond there," he said.

GWA managing director Greg Pauline said he was pleased the parties had reached a multi-year agreement to keep grain on SA rail lines.

"This is a milestone and GWA will continue to work closely with Viterra for the best outcomes for our stakeholders," Mr Pauline said.

Grain Producers SA chief executive Darren Arney welcomed the deal as a way to keep grain off SA's ailing rural road network.

“Where the most efficient and effective grain transport is by rail, then that makes a lot of sense, and hopefully that can be reflected in the transport charges," he said.

"It’s good that there’s at least three years more, because they’ve only just finished paying into the EP rail fund."

Mr Krause said the deal was the first to be signed in a fully operational deregulated market.

"There’s been an enormous amount of change in the industry in the last five to seven years – we’ve got multiple exporters, we’ve got people demanding services in peak periods, we’ve got growers delivering grain at harvest time in shorter periods of time, so all of that has been built into the agreement - it’s not just around the cost side of things," he said.

"That’s why it’s been such a long process to get to something that we believe is going to provide not only certainty around the logistics task for exporters and for movement from upcountry SA, but performs it in a way that’s going to be sustainable for the longer term.”

He said the large capacity of grain trains was a major advantage at harvest time, especially in high-yield regions.

"Part of what rail does is around competitive movement of grain to the port, but the second thing is that it provides capacity. Out of the Mid North, we’re probably talking about 3000-tonne trains, so they provide capacity.

"One of the things we do during harvest time is turn those trains very quickly to try and keep space available in as many sites upcountry that are filling up as we can so that growers can keep delivering there.

"Rail performs a really important task in the middle of harvest, when it’s very difficult to get trucks."

Mr Krause said Mallee growers would "still get a benefit" out of the agreement.

"If there was no rail in the state, all the trucks that are available would be spread out over a much bigger task," he said.

He said declining volumes meant the Mallee lines were no longer cost-effective.

"Unfortunately we were the sole user (of the lines) in the Mallee region, and the volumes on those lines had been falling over recent years, and it didn’t stand up economically," he said.

"On this side of the state, we’re talking about Australian Rail Track Corporation lines, where there’s lots of other traffic on those lines – it’s not just grain.

"A number of Mallee growers will deliver into Tailem Bend, where the task will continue to be handled by rail. The supply chain has changed a little bit - instead of the trains going up the Mallee line and being loaded and going all the way to Adelaide, the growers are delivering into Tailem Bend and it’s going by rail from there."

Mr Krause said Viterra was working to make rail transport as efficient as possible - in line with graingrowers' changing demands - and was looking at 24-hour grain movements and methods to unload and load grain faster. He pointed to the record amount of grain moved by rail in March as evidence of the improving efficiencies.

"The task actually doesn’t change, but our customers are saying ‘we want grain delivered in a shorter period of time’," he said. "Our task is to make the infrastructure we’ve got work harder and faster – and that means turning the trains around faster, installing lighting for 24-hour loading upcountry, and having staff available to come in and discharge the rail as soon as it arrives in the port."

"The employees are doing a sensational job – both Viterra and GWA employees have been working together to look for opportunities to do things smarter, faster and safer. A lot of these initiatives are being driven by the people doing the job."

The story Viterra signs $100m rail deal first appeared on Farm Online.

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