Minister for Transport Terry Mulder.

A $7.1 million joint project between the Victorian government and food company SunRice will see the Echuca to Toolamba track reopen for rail freight in the third quarter of 2013.

Minister for Transport Terry Mulder says growing freight on rail is a priority for government and reopening the line will help to increase rail freight transport efficiency and reduce road congestion.

"Re-opening the branch line between Echuca and Toolamba will provide a more efficient link to the Port of Melbourne for SunRice and other exporters moving freight from the Goulburn Valley and southern New South Wales.

"It will provide an alternative route for freight to the busy Bendigo to Melbourne passenger line, where freight services currently have to compete for access with passenger services.

"The upgrade will encourage other grain or freight operators to use the line as an alternative to moving freight on the road and will help to reduce the number of trucks on the road."

The rail line has been closed to rail freight since 2007, although it was temporarily opened through a $550,000 Coalition Government grant in early 2011.

Work on the upgrade is planned to commence in mid-2013