PoM rent increase will damage dairy's competitiveness

Posted on Wednesday, June 17, 2015 - Category: In the News

The Australian Dairy Industry Council (ADIC) is extremely concerned about the Victorian Government proposal to increase rent of stevedoring facilities at the Port of Melbourne (PoM). The size of the reported increase will have a large and disproportionate impact on the dairy industry, including both dairy farmers and companies that export product through the port.

With around 85% of total dairy exports channelled through the PoM, dairy is the 5th largest user of the port. According to ADIC Chair, Noel Campbell the move could cripple dairy’s future competitiveness.

“The Australian dairy industry operates in an open international market, competing directly with products from other dairy producing countries,” Mr Campbell explained.

“Dairy manufacturers operating out of the PoM will be unable to simply add on the cost of the rent increase to their exported products without incurring negative effects in the global market place. This means the rent hike will be charged back to dairy farmers.”

Basing their estimating on the fact that each Twenty-foot Equivalent Container (TEU) will be handed a $100 rent increase per container, the ADIC said the impact on individual dairy farmers could be in excess of $1,000 per farm.

“The export market provides substantial and important markets for our products, one where there is clearly great demand for our high quality, safe products,” Mr Campbell said. “Exporting to these regions ensures the industry’s ongoing viability and growth.”

The ADIC has also expressed concern that the funds raised by the Government through the increased rent are not committed to improving port facilities, but will instead be directed to the cost of removing railway crossings in suburban Melbourne.

This will have repercussions for port fees in the future and provide no direct benefit to the dairy and other manufacturers that use the port. The impact on dairy and other commodity exports is further exacerbated by the proposed 50-year non-compete clause that will effectively mean the abandonment of the development of Hastings as an alternative deep-water port.

For further information on the ADIC’s policy and advocacy work in the markets, trade and value chain area click here


 

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