Eyre Peninsula growers are marginally supportive of Viterra's return to rail proposal, but there are significant competition concerns if the project receives taxpayer funding, a Grain Producers SA survey shows.
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Despite 59 per cent of the almost 100 participating growers supporting the proposal, 66pc were concerned the project could impinge on price gains made from increased grain handler competition.
Rail freight operator Aurizon and Viterra are lobbying state and federal governments for assistance in returning its grain freight to rail, after the handler left the network in favour of roads in 2019.
It is estimated the return could cost in the order of $220 million.
The state government and EP councils have recently funded a business study into the Peninsula's grain export supply chain at large, which will help them decide whether to recommend the rail project as a funding priority to federal government.
The proposal has returned a projected 3:1 benefit cost ratio.
Many of those farmers supportive of the proposal believe it will result in less trucks on the road, decreasing damage to the road network and improving road safety.
"I'm concerned about the state of our roads now and what they will be in the coming years if the rail is not reintroduced," one grower said.
"If only to take the extra trucks off the road, yes I support it," another said.
Others were not so supportive, saying farmers had invested money in trucks and road equipment to handle the absence of rail, and the impact on competition would be detrimental in the long run.
"It may lower costs in the short-term, but not in the long-term. If the costs are so much lower that it renders the competition unviable, then the cost will rise again when the competition ceases," one grower said.
"I understand the traffic, road and climate issues that rail can help with, however, on balance I am not in favour as competition is imperative to a successful and sustainable business model," said another.
GPSA chief executive officer Brad Perry said 41pc of respondents believed the return of rail would be beneficial to their enterprises.
However, he said many wanted assurances from governments that a reinstatement would not result in an additional levy created for growers to fund it.
Lock farmer and T-Ports director Andrew Polkinghorne has spoken out in opposition to the rail proposal, saying if the business case stacked up, Viterra could fund it themselves.
He believes most farmers would be reluctant to lose the competitive landscape that has emerged since T-Ports emerged as an alternative grain handler in 2018.
"Why government would put money into something that benefits a multinational, and make it particularly anticompetitive against another business in the same trade that is backed by private investment - I don't why they would do it," he said.
"Prior to T-Ports, the EP was the cheapest source of wheat in Australia and farmers now receive arguably an extra $25-$30 a tonne in their pocket regardless of whether they use T-Ports or not.
"If it was to revert to a monopoly situation, that advantage would disappear again."
Viterra, however, believes a return to rail on the EP would "enhance grower competitiveness in international markets" by linking their upcountry sites to ports.
Viterra Australia and New Zealand chief executive officer Philip Hughes said the project would "future proof export infrastructure, capacity and competitiveness for generations to come".
He said the company had received significant community and grower support since announcing its rail reinstatement plans.
"The project will assist EP growers to achieve significant economic benefit for their grain by exporting in the first half of the year and reduce freight costs by up to 25pc, which we will pass back to growers, as well as the community and environmental benefits of less trucks on the roads and reduced CO2 emissions," he said.
EP Co-operative Bulk Handling chair and Minnipa farmer Bruce Heddle said competition concerns were valid if the return to rail project involved taxpayer funding.
He believed that support for the project was likely driven by a nostalgic attachment to the rail system.
"For delivering a relatively small tonnage of grain from one corner of the EP, it would be extremely hard for the case to stack up I would have thought," he said.
"Especially given the investment that's gone into the road transport industry in the past decade, the competitive forces there are going to be extremely strong.
"I'd be very curious to see how the numbers could ever be put together without a massive taxpayer subsidy, which would raise all kinds of complicated issues."
