Feed Standards Australia launches fuel levy calculator
Feed Standards Australia, an operating division of the Feed Central group, has developed what it describes as Australia’s first fuel levy calculator dedicated to the national hay and straw industry. The organisation said the tool is designed to address uncertainty over how changes in diesel prices should be reflected in freight agreements.
Tim Ford, the group’s general manager, said uncertainty over which party should absorb fuel-price increases had complicated negotiations between forage growers, transport operators and livestock producers. In his account, the lack of a common method had also made some parties reluctant to sign delivery agreements lasting several months. The calculator uses a standard mathematical model that is updated weekly.
The system was developed with Feed Central Trading, a commercial brokerage business. It uses independently published Australian retail and wholesale diesel benchmarks and separates fuel movements from the agreed price of the fodder and the underlying transport charge.
Under the proposed contract structure, the buyer and seller agree the hay price and a base freight rate in advance. The calculator then determines a variable fuel surcharge that applies only to the fuel component of haulage, rather than to the whole freight invoice. The surcharge can move down as well as up when diesel prices change.
Freight can account for more than 30% to 45% of the delivered cost of forage, according to the source. Dairy farms in Victoria, southern New South Wales and eastern South Australia commonly depend on road transport to move cereal straw, lucerne hay and specialist silage from inland grain-growing areas over distances of hundreds of kilometres.
Feed Standards Australia said more predictable freight calculations could help dairy producers, merchants, brokers, cooperatives and carriers plan multi-month transactions. The source also said that heavy truck-and-trailer operators work with narrow gross margins, while agricultural merchants need clearer cost estimates for credit and receivables management. For dairy farms, the tool is intended to support budgeting for dry matter, fibre and other feed requirements when arranging supplies ahead of delivery.
