With fertiliser prices reaching never-before-seen highs and the cost of fuel soaring, Australian farmers are struggling to keep up with the cost of production.
Key points:
- Fertiliser prices are at record levels
- Experts say it is due to Russia’s invasion of Ukraine and trade sanctions
- Russia is the world’s largest exporter of fertiliser
In the past week alone, the cost of raw materials has risen 10 per cent.
Fertiliser Technology Research Centre director Mike McLaughlin said there were two reasons for the price hike.
Ukraine has deposits of key fertiliser ingredients potash and urea, and exports have been limited.
Russia is the world’s biggest fertiliser exporter but because of trade sanctions, restrictions have been placed on imports into Australia.
“The demand is still there because food demand is always increasing, but the supply of fertiliser is limited, so the price just shot up,” Professor McLaughlin said.
“These are the highest prices ever for fertiliser raw materials and that means it’s going to flow through.
“It’s one of the reasons also that wheat prices have also gone up.”
The cost of vegetables such as broccoli, potatoes and cabbages have recently risen by up to 75 per cent, with the cost of fresh and frozen food tipped to continue to increase in coming weeks.
Record levels
Thomas Elder Market analyst Andrew Whitelaw said Australian farmers had not benefited from the increase in grain price.
“The cost of farming is going up at a rate beyond the grain price,” he said.
“Fertiliser is expensive [as well as] chemicals, labour, and diesel.
“[They are] the four main inputs that a farmer will face and they’re all at record levels.”
Mr Whitelaw said Russia’s invasion of Ukraine had dramatically altered the market.
“It’s changed supply chains in a massive way,” he said.
Search for alternatives
Professor McLaughlin said some countries were looking for alternative supplies of fertiliser as well as trying to ramp up domestic production.
“It is difficult to cut back on fertiliser use because it will get reflected in lower yields and lower yields means that the price of grain will go up in the future,” he said.
“When oil prices go up, people look for alternatives and with oil we have substitutes in terms of electric vehicles and gas, but with fertiliser there are no substitutes,” Prof McLaughlin said.
“We may see new mines or new facilities open up because the fertiliser price is so high and it suddenly makes that particular resource economic.”
He said high natural gas prices will also continue to impact fertiliser prices because natural gas is used to manufacture nitrogen fertilisers.
Home gardener solutions
While the agricultural industry searches for alternatives there are some ready-made replacements for those with a green thumb, according to Professor McLaughlin.
“You can replace the mineral fertiliser you buy in bags at the supermarket with chook poo or animal manure like horse manure or cattle manure,” he said.
“You can get blood and bone from abattoirs [and] those sorts of things.
“They’ve also got other benefits for organic matter in the soil.”
