DUE to rising gas and shipping prices, the high cost of fertiliser is not expected to significantly decrease this year with the trend to continue into 2023, according to National Australia Bank (NAB) agribusiness economist Phin Ziebell.
Mr Ziebell gave an update on the increasing cost of farm inputs at the Toowoomba and Surat Basin Enterprise (TSBE) Protein 2022 Conference at Dalby on Wednesday.
He said fertiliser costs will continue to be a “huge issue” for producers.
“It predates the Ukraine-Russia tensions and starts to go back to the beginning of the pandemic when we saw some really aggressive price rises in fertiliser,” Mr Ziebell said.
“The high global shipping costs has just compounded these issues.”
He said the spike in natural gas prices was one of the key reasons for seeing a rise in prices for fertiliser including urea, which are made from natural gas.
“I don’t really have a lot of good news for you on this; I think fertiliser input costs are going to be a global challenge in 2022 and potentially into 2023 as well.
“I don’t think it means that things are going to be really bad here.
“A lot of areas have had good soil-moisture levels so are well set up, and of course grain prices are high, but I am not expecting these prices to come off in any meaningful way in the next six to 12 months.
“I would love it if they did, but, I think the factors that have led to this are sort of baked in now for some time.
“It is really something to watch as it is going to have broader impacts than you would ordinarily think on agriculture.”
Fertiliser use to depend on upcoming season
GrainGrowers chair Brett Hosking said Australian farmers will be closely watching the fertiliser prices as they move into the winter-cropping season.
He said, while the supply varied for different inputs, all were experiencing price rises.
“I think most growers have secured their phosphorus for the planting season and most of the supply is either in Australia already or on the water,” Mr Hosking said.
“The security of product is good, but it is extremely expensive in comparison to other years.
“Nitrogen has a bigger question mark around it.
“There are some growers who have secured nitrogen for the upcoming season
“From what we understand supply isn’t an issue for nitrogen or urea, but price is a big concern for growers.”
Mr Hosking said the cost of nitrogen, which sits at more than double last year’s prices, may make farmers reconsider their use of the product.
“Nitrogen is one where there is a little bit of flexibility on the growers’ behalf.
“They might, considering where the price is, be a little bit gun shy compared to other years when they may have been more liberal when it comes to their application of nitrogen.”
He said while strong grain prices and moisture levels are giving growers confidence, this may change depending on how these factors change in coming months.
“Obviously bigger fertiliser prices mean the grower is taking a much bigger roll of the dice.
“The stakes and risk profile of the growers becomes a whole lot higher.”
Need for local manufacturing
Mr Hosking said the current cost of fertiliser combined with international uncertainty and COVID-19 supply chain issues had highlighted the need for local manufacturing of farm inputs.
“It’s creating a real focus and opportunity to think quite seriously around domestic manufacturing of inputs.
“This would make sure that we have security of product more than anything.
“It also makes sense from a productivity point of view and we would be creating jobs in Australia.”
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