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Grain handling group Viterra has announced it will not renew its contract with rail company Genesee and Wyoming Australia (GWA) at the end of May for grain movement on the Eyre Peninsula.
It says it wants to ensure the company continues to provide growers and exporters with a competitive supply chain.
The company will move to transporting grain entirely by trucks, instead of train.
Viterra commercial and logistics manager James Murray said it was essential Viterra provided an efficient and cost-effective service that met the needs of growers and exporters to ensure South Australian grain was competitive internationally.
"We have a long-term commitment to providing grain storage and handling services to Eyre Peninsula growers and maintaining Port Lincoln as a key export terminal for South Australian grain," Mr Murray said.
In 2015 Viterra entered a three-year agreement with GWA and extended it for a further 12 months in 2017 to allow Viterra, GWA, the State Government, and other stakeholders to work through options for grain movement.
But Mr Murray said the time had come to make the decision to move to road.
"This is a significant decision for the business, one we have very carefully assessed and considered … we are reviewing the need for investment at our sites to support the transition from rail to road," he said.
"We have made this decision based on the current situation and the information we have available.
"If the situation changes with rail on Eyre Peninsula and it becomes efficient and cost effective compared to road freight, we will certainly reconsider our options."
One of the biggest concerns for Eyre Peninsula locals has been the state of the roads with South Australian Senator Alex Gallacher raising in the Australian Senate recently that a move to complete road transport would be "catastrophic".
Mr Gallacher said the closure of rail could see an additional 30,000 B double trucks on the road.
"It's unsettling for the workforce," he said.
Viterra's James Murray said there would be extra trucks on the road, but they would be working with their contractors to ensure trucks were safe on the road.
"We have assessed those numbers and it will be 48 loaded trucks a day on average Monday to Friday with 12 on the Lincoln Highway and the balance of 36 on the Tod Highway," Mr Murray said.
"In conjunction with our carriers we have a number of procedures around chain of responsibility, including mass management, fatigue and driver safety, but we certainly understand the concerns of the community.
"We will continue to have a range of discussions with council and government through this transition period and certainly roads will be a part of this discussion."
GWA released a statement to say it had notified its employees that Viterra would not be renewing its rail grain haulage agreement.
The company said it had worked for the past four years with Viterra and the South Australian Government to explore all commercially viable future rail options and these efforts had been in the face of reduced grain volumes on rail, and the historic legacy of the cost to upgrade and maintain what is an under-utilised narrow-gauge rail network used only by one customer.
GWA also said the rail network would remain open for the foreseeable future for any potential customer usage.
Congestion biggest concernDavid Bascombe farms just outside of Port Lincoln in the Poonindie Hills and said his biggest concern will be the congestion on the roads and at the silos.
He said the rail was shut for a short time last year and the turnaround from a 10 kilometre trip to Port Lincoln for him to deliver grain was four hours.
"Next harvest will be worse because Port Lincoln is just a bottleneck of trucks where you have no room to move," he said.
"We get fined for parking in certain spots while we are waiting and they are going to have to do some really good homework there.
"The biggest thing will be in the silo system. The headers are bigger now and getting off more grain quicker, so how the hell do you move that grain that is filling a road train in an hour?"
The executive director of the South Australian Road Transport Association, Steve Shearer, said the announcement will see the need for a lot more drivers and trucks in the industry.
He said he hoped that if there is congestion and long wait times at silos that drivers are not targeted for not meeting the needs of the fatigue laws.
"Queues at the silos are going to be much longer, and drivers will be sitting there for longer, and that will have an impact on their time that they can count towards breaks," Mr Shearer said.
"We have very complicated rules when it comes to fatigue management.
Mr Shearer said this now comes down to making sure the roads are fixed in many parts of the Eyre Peninsula to keep everybody safe.
"If you have poor road shoulders and trucks are passing each other on either side of the road, they often go off onto the dirt. That means tyres are flicking up rocks and trailers are bouncing around," he said.
"It means that it does become unsafe for road users, but also it means a lot of extra maintenance that is needed on trucks as well."
Calls for report to be releasedThe South Australian Freight Council wants a recent report into grain transport released as soon as possible.
The Eyre Peninsula rail-road grain impact report was commissioned by the State Government and rail operator GWA, and is currently being looked at by transport minister Stephan Knoll.
The executive officer of the SA Freight Council, Evan Knapp, said he was disappointed that the maintenance and investment costs of the rail line have risen to the point that it is no longer economic for Viterra to move grain on that network.
"One of things we need to realise is that if you add thousands of extra trucks on the road your maintenance costs go up, so there is a case here for the State Government to spend money on the rail rather than extra money on the roads."
Mr Knapp said they need to see what this report details so they know what the options are for future grain movement.
"We need to know what the full impacts will be for the Eyre Peninsula community.
He said they want to see options for keeping the rail line open.
"We want to see the actual impacts fully quantified for the Eyre Peninsula and that gives us the case to go to the minister and the Commonwealth potentially to ask for funds to keep that rail line open," he said.
Minister claims agreement is a commercial oneSouth Australia's Transport Minister Stephan Knoll said he has the report and has been in discussions with Viterra and GWA for some time, but that the latest decision is a commercial one between Viterra and GWA.
Mr Knoll said the suggestion from the SA Freight Council that it would be cheaper to keep the rail line open does not add up.
"I have been told that what would be needed to keep this rail line open long term is tens, if not hundreds, of millions of dollars, and the fact that Viterra chooses to use road transport a lot more than rail it just does not make it worth it," he said.
"We have already been investing money into roads on the Eyre Peninsula with about $10 million announced a number of months back for the Tod, Eyre and Birdseye highways."
He said it is an opportunity to upgrade something that is used by more people.
"We could choose to put a whole heap of money into the rail or we could use this to put more money into the roads on the Eyre Peninsula and that doesn't just help grain trucks, that helps everybody that lives there to have better roads," he said.
Mr Knoll said the Eyre Peninsula rail-road grain impact report will be released once negotiations have been finalised with the Commonwealth Government.
This article first appeared on www.abc.net.au
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