CROP protection and seed company, Nufarm, is urging the Australian Government to take more ambitious steps in developing a local renewable fuels industry.
At the company’s annual general meeting on Thursday, Nufarm chair John Gillam told investors the renewable fuels sector was a significant opportunity for the industry.
He said Australian growers were best placed to capitalise on the burgeoning demand for feedstock used to produce sustainable fuels.
“Australia’s globally competitive agriculture sector is well-placed to both drive and benefit from the development of a local renewable fuels industry,” Mr Gillam said.
“Australian farmers are already providing feedstocks to support the decarbonisation of transportation in Europe.
“Most of the canola Australia exports to Europe is converted into biofuels, thanks to the incentives for bioenergy production and use in the EU.”
Mr Gillam said it was estimated that 45 percent of Australia’s energy comes from liquid fuels.
“Liquid fuels will remain a critical energy source for sectors such as aviation, where electrification and hydrogen power will not be viable options for long-haul flights for the foreseeable future.”
While he welcomed stronger emission reduction targets and the publication of the Aviation Green Paper, Mr Gillam said more could be done to grow the local renewable fuels industry.
“We encourage the Albanese Government to be ambitious in harnessing Australia’s natural resources and agricultural capabilities to build a local renewable fuels industry that will unlock another source of revenue for our farmers.
“Australia urgently needs policies to accelerate the development of a local renewable fuels industry to support the decarbonisation of hard to abate sectors like aviation.
“We have a narrow window of opportunity to achieve this before Australia falls too far behind other countries with policies successfully attracting investment to scale up their industries.
“Our ability to realise this once-in-a-generation opportunity hangs in the balance.”
Nufarm is working to develop two crops, carinata and Energy Cane, which it says could service some of this demand for sustainable fuel feedstocks without compromising global food supplies.
Currently neither of these crops are available in Australia.
Nufarm managing director and CEO Greg Hunt said the company was working to expand plantings of these crops.
“[O]ur Carinata crop produces a non-food feedstock that can be rapidly expanded on multiple continents to meet the increasing demand for Sustainable Aviation Fuel,” Mr Hunt told the meeting.
“During the year, we facilitated the first bulk shipment of carinata seed under our long-term market development agreement with bp.
“In 2024, we plan to further expand carinata plantings in North and South America and undertake first commercial plantings in France and Spain, establishing production in the important European biofuels market.”
Energy Cane is a new addition to Nufarm, which acquired the technology from Brazilian company GranBio Investimentos SA in 2022.
It is a “high biomass sugarcane” that has increased ethanol and bioenergy output compared to traditional sugar cane.
“The international energy agency expects global biofuels demand to expand by 25% over the next 5 years,” Mr Hunt said.
“We believe that the technical profile of Carinata and Energy Cane position them as leading contenders in the renewable energy feedstocks sector and will provide additional revenue streams for farmers, support long term regional development and ultimately national economic growth.”
As part of the AGM proceedings, Mr Hunt gave shareholders an update on the company’s projected performance for financial year 2024.
He said, as announced at the FY23 results in November, Nufarm predicted that the first half of FY24 would be “challenging”.
“That has proven to be the case over the first quarter as the industry has continued to deal with an overhang of inventory and higher cost of goods, which has pressured margins.”
He said rainfall across the east coast of Australia in recent months and positive grower economics would improve crop protection demand in the second half of FY24.
“As a result of challenging first half conditions in crop protection, we now expect that earnings will be less skewed towards the first half than previously indicated.
“We expect the group to return to growth in the second half of FY24 and remain on track to meet our FY26 aspirations.”