“Without a reliable supply of diesel, our industry grinds to a halt and so does our ability to produce food and fibre. This move will help ensure farmers can keep farming and providing food for our supermarket shelves.
“This is something the VFF has been advocating for and it’s pleasing to see that message being heard.”
Victoria has now joined Western Australia as the only two Australian states to create a fuel reserve.
Premier Jacinta Allan said the move would help ensure confidence across Victoria’s agricultural industry, which produces more than $22-billion annually.
“Our regional communities rely on a strong harvest. That starts with knowing fuel will be there when it’s needed,” she said.
“Backing farmers means backing local jobs and businesses and keeping grocery prices down for everyone.”
Ms Allen said the reserve would not affect day-to-day fuel supply in Victoria, and would be released only if the Federal Government activated level four of its National Fuel Security Plan.
On Wednesday last week the Federal Government also announced it would provide $10-billion to establish a national reserve of fertiliser and about one billion litres of fuel, expanding the country’s onshore fuel supply to 50 days.
Macquarie University applied finance senior lecturer Lurion De Mello welcomed both the Victorian and Federal Governments’ announcements, but said questions about storage and distribution of the reserves remained unanswered.
“I think the [Federal] Government should be a bit more clear exactly where this storage is going to be held,” he said.
“The problem has not actually been fuel itself, it’s more to do with the distribution – we’ve had problems getting that fuel out to farmers and out to regional areas.
“I think we need a proper distribution channel – that means having the fuel in the right place at the right time.”
Dr De Mello said Victoria faced similar fuel-distribution challenges to other eastern states.
“Who will get [fuel] first will depend on having a good distribution of that storage along the east coast,” he said.
“In Western Australia they have a lot of regional ports where fuel comes in directly, so rather than having Newcastle as a main hub, we need more regional storage facilities where fuel can go from the main ports to those facilities seamlessly.”
Dr De Mello said the state and federal governments’ commitments were ‘quite significant’.
“If you add anything from seven days to 10 days extra of fuel storage, that is a significant amount. That will buffer a bit of extra supply,” he said.
“It takes two or three weeks for fuel to come from the Asian refineries. It takes around six or seven weeks for diesel in particular to come from America, and we have seen that trend now where a lot of diesel is coming from America.
“We have to have as many buffers in as possible to account for that long journey for fuel to arrive here on our shores.”
The Nationals’ Member for Lowan Emma Kealy said her party had called on the State Government to create a fuel reserve since mid-March.
“It has taken far too long for the Victorian Labor government to secure an emergency diesel supply for farmers, with some growers reducing planting due to concerns surrounding fuel supply for the entire growing season,” she said.
“To future-proof our farmers from further fuel-supply issues in the future, Premier Allan should establish a fund to support farmers to increase their on-farm fuel storage.
“Decentralising fuel stockpiles to a local level would permanently relieve pressure on fuel distribution chains and ensure Victoria’s stockpile can support the industries that rely on diesel for longer.”
Mr Star echoed Ms Kealy’s call for the government to expand on-farm fuel storage capabilities.
“The next logical step is working towards the ability to store more fuel on-farm to help cushion farmers from any future shocks,” he said.
Mr Star said fuel security was ‘only one piece of the puzzle’ and called on the Federal Government to provide more financial support for farmers Australia-wide.
“Farmers are still dealing with high input costs, tight margins and ongoing seasonal challenges,” he said.
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