Chain of events: a blog of Food Chain Intelligence

Prime Minister Julia Gillard has announced today several measures to fund the expected $5.6 billion bill for flood recovery in Australia.

The major initiatives are a levy of 0.5% for people with taxable income between $50,001 and $100,000; the levy increases to 1% for those earning above $100,000. Flood affected people will be exempted.

However, a range of cost cutting measures regarding green initiatives were also introduced. These are:

- Not proceeding with the Cleaner Car Rebate Scheme.

- Abolishing the Green Car Innovation Fund

- Reducing and deferring spending on the Carbon Capture and Storage Flagships and Solar Flagships programs and the Global Carbon Capture and Storage Institute

- Capping annual claims under the Liquefied Petroleum Gas (LPG) Vehicle Scheme

- Capping funding for the Renewable Energy Bonus Scheme Solar Hot Water Rebate

- Not proceeding with Round 2 of the Green Start Program

- Capping funding for the Solar Homes and Communities Plan.

PM Gillard said that “The key to these carbon abatement program savings is my determination to deliver a carbon price.”

“[..]So 2011 remains a year when I will be delivering the national broadband network, creating more opportunity through education reforms and improving health care as well as a year when I will make long-term decisions on workforce participation and a carbon price.”

The Australian Government has announced a Disaster Income Recovery Subsidy of about $500 per fortnight for employees and small businesses who live in or derive an income from a flood affected area and have lost their income. Additionally, the Victorian, NSW and Queensland Governments have announced grant schemes for small businesses who have directly suffered damage to their premises and equipment as a result of the floods.

The range of businesses supported include primary producers, small businesses, and other rural and urban small businesses.

Low interest rate loans are also available for small businesses that have exhausted all other sources of finance.

The Australian, Victorian, NSW and Queensland Governments have also announced a range of hardship payments to help individuals and families.
For information about the personal assistance available, contact:
Australian Government, Ph:180 22 66
www.centrelink.gov.au

Victorian Government, www.dhs.vic.gov.au
Queensland Government,Ph:1800 173 349
www.qld.gov.au/floods

NSW Government, Ph:1800 018 444
www.community.nsw.gov.au

My thanks to David Costelloe (RWTA) for sending the update from the Victorian Transport Association.

IBISWorld has released a report outlining the economic impact of the floods in construction, tourism, agriculture and transport.
Some aspects mentioned in this report are:

Fruit and vegetables

-QLD supplies 28% of Australia’s fruit and vegetables, making it the leading producer of fresh produce in the country.
-14% of the nation’s produce is sourced from many flooded areas over the year. Fruit and vegetable buyers have emphasised that much of the produce from Queensland had already been picked and packed when the floods hit.
-Crops that have been affected the most include pumpkins, tomatoes, capsicum, celery, avocados, lettuce, zucchini, broccoli, certain types of potatoes, mango, banana, melon, tropical fruit, grapes and seedless watermelon.
-There is a real risk farmers won’t be able to get the autumn crop underway at all.
-Overall, the vegetable growing industry is likely to lose 8% this financial year and a further 2% in 2011-12.

It is worth noting that fruit markets were more dependent on produce from Victoria, South Australia and Tasmania at this time of year. The long term issue is related to QLD capability to plant now for the Autumn crops.

Sugar

-QLD sugarcane growers produce 95% of the country’s annual crop.
- Some important sugarcane fields are waterlogged. This prevents sugarcane harvest for many growers in 2011.
- Queensland Sugar Limited has
already started purchasing sugar from
Brazil and Thailand to supplement the
fall in Australian production.
- Queensland Sugar Limited has
already started purchasing sugar from
Brazil and Thailand to supplement the
fall in Australian production.
-IBISWorld predicts sugar cane growers will lose 27% this year with potential further losses into 2011-2012.

Grains

-QLD accounts for 10% of national grain production in Australia.
-The floods affected virtually all crop-growing areas. Analysts are expecting grain
losses of up to 500,000 tonnes, including
wheat, barley and sorghum.
-The impact of the Queensland floods is likely to reach $400 million for the grain industry.
-Delays in shipping have affected grain exports.
-Farmers that completed harvest before the worst of the recent deluge have been unable to capitalise on the current spike in global grain prices, due to shipping problems.

Livestock

-QLD contributes with about 12% of beef cattle herds and 8% of dairy cattle herds.
-45% of meat processors are based in QLD.
-27.3% of pig farms are also QLD-based.
-17% of poultry meat farms and 18% egg farms are located in QLD.
-The extent of damage to this industry is still unknown.
-The greatest challenge that producers will face is transporting livestock to slaughter houses,given flooded roads and damage to transport infrastructure.

Fisheries

This is an item not covered by the IBISWorld report. There are indications of a slow down in prawn and mud crab offerings in fish markets. This trend is expected to last for eight weeks. As per usual, demand will dictate if prices in these items go up. Some infrastructure in marinas has been damaged.

The media has said that the Brisbane’s Produce Market is to reopen today. This needs some context: The re-opening is partial.The focus in the past hours has been on cleaning trade facilities and storage areas. But clearly, several restrictions will apply. Check the updates for today in the Brismark website.

The Port of Brisbane is re-opening for shipping in the Fisherman Island precinct today, Monday 17 January. Other reaches of the river and port will be gradually re-opened as the channel and berth pockets are surveyed and cleared. Upriver areas may reopen on Tuesday 18 Jan. Check their website for the latest news.

Roads: I posted a map yesterday showing the roads closed (or with restrictions) to transit . It is estimated that between 70,000km to 90,000km of council roads have been damaged by floods in QLD, which represents about 27% of the total state’s road kms.

Rail:Lloyd’s List says that severe damage to the rail systems that feed Gladstone port has been recently revealed. Road and rail disruptions had blocked receivals at grain terminals at Brisbane and Gladstone. However trucks and trains are still bringing grain to the port at Mackay.

Ports: Queensland has 20 ports:15 trading ports, two community ports, and three smaller gazetted ports located at regular intervals from Brisbane in the south east to Karumba in the north west. These are shown in the following map, which also shows road infrastructure affected (blue and pink segments).

Click here to access the map of Ports in QLD.

Non-operational ports have a red cross. At the time of writing this, the Port of Brisbane remains closed due to strong currents and debris from the floods. Fortunately, no damages have been reported. Landside port infrastructure has not been damaged during the flood (the webcams show a dry Port!). Roads have remained open and power supply is stable.

Analysis:
Looking at the map above, it seems that the only mass option suitable to transfer perishables (food and pharmaceutical products) by sea is the Townsville port. This is exactly how IGA was sending dry goods before Brisbane was affected. Some supermarkets are also sending goods via barges to Cairns and Weipa.

The road option means a huge detour via the NT and transport from Mount Isa to Charters Towers to Cairns and so on. Woolworths is sending goods to Mount Isa through the Adelaide-to-Darwin rail line and then by truck from Tennant Creek. The retailer has also started barging supplies to Townsville.

From this map it is also clear that the transport situation to North QLD will greatly improve if Peak Downs Highway is opened so that trucks can arrive to Mackay and then use Bruce Highway to reach Bowen. This is about 300 km of repairs and seems a far easier task than opening all roads needed for normal transport through Brisbane (also consider that BrisMark is down).

It has been reiterated that the problem is arising due to the expected delays in shipments from the logistical challenges explained. But panic buying is also playing a substantial role. This panic should be abated when people realises that only some small fragments of road need to be repaired to have normal replenishment of food. People also need to ask “what am I going to do with all this stuff now?”. Particularly perishables that can’t be stored long term.

If roads are more difficult to repair in the short term, shipping groceries by sea would be a better alternative. I believe that, with some extra infrastructure to accommodate perishables, shipping and reception in Weipa and Cairns could be possible as a medium term solution. For the moment being, even planes are being used. These are emergency measures that will not be sustainable in 2-3 weeks time.

In regards to exports, agricultural shipments are being delayed, for example, 140,000 tonnes of grain scheduled to be exported from the Brisbane port have not departed and a sugar ship is waiting offshore of Bundaberg, unable to load because that port is also closed.
UPDATE 15 Jan 2011
Trucks are now allowed to use the Bruce Highway again between Brisbane and Cairns. This will enable the industry to deliver foodstuffs and recovery equipment into Rockhampton, Mackay, Townsville and Cairns.