Advertisment

On The Land

23 April, 2022

Fertiliser prices huge issue for farmers

AUSTRALIAN fertiliser prices are at an all-time record high on the back of the war in Ukraine and the effect that war is having on trade flows and import shipping costs.

By Sally Turley

Photo | Dreamstime
Photo | Dreamstime

Russia is a key exporter of nitrogen, phosphate and potash fertilisers and reduced access to product combined with increasing freight and gas costs indicate little sign of relief for farmers for at least the remainder of this year. 

Excessive fertiliser costs are a huge issue for producers across most farming sectors and with commodity analysts saying we are yet to see the peak in this market, it is no wonder farmers have been examining their fertiliser use options. 

Different industry sectors are each experiencing this global event in their own way. While production figures fell for the Australian dairy industry season, global dairy commodity prices continued to strengthen during March. 

One of the Tableland’s largest milk producers, Jason Graham of “Cheelonga Farming” near Tarzali, said: “We don't spread a lot of fertiliser during the wet season, but with urea currently worth $2100 a tonne, we are about to jump into our annual plant of 300 acres of rye grass for winter. 

“To get the most out of the grass, we normally apply one bag of urea per acre every three weeks to the paddock.” 

At six applications, that regime will cost Jason and his wife Kelly, close to $100,000 to keep their 850-strong herd of milkers in full production this winter. 

Having just walked out of a meeting with Australian dairy company, Bega, that “had everyone smiling” however, eased the pain a little for Mr Graham. 

“I am happy to be supplying an Australian company and we are optimistic their 1 June announcement to farmers will reflect the improved global market,” he said. 

“Long term however, we will be looking outside the square for any viable alternatives to using traditional fertilisers. We will be trialling any product that offers a practical solution, time, labour and production-wise, on-farm, in a thorough, documented way.” 

Tableland Fertilisers general manager Paul Keever said fertiliser prices had many farmers examining their gross margins and deciding not to grow crops that will offer minimal or zero return. 

“A lot of cane growers are considering converting to lower fertiliser and labour input broad-acre crops like peanuts next season. As cane is a return crop, they are normally committed to growing it continuously for 5-7 years until it reaches maturity,” he said. 

“It usually produces around 100 tonnes to the acre for the first and second season, dropping to 70T and below during successive years. Growers usually rip out the oldest 20 per cent of the crop each year and plant a new area in its place. 

“Increased fertiliser costs have them considering ripping out larger areas of older cane than usual and either replanting them with fresh cane or increasing the area under broad-acre crops to increase returns or reduce costs until fertiliser prices regain some equilibrium. 

“Many beef producers have stopped fertilising their paddocks altogether, prepared to settle for the weight gains they are currently getting in the upbeat cattle market and just sitting it out until things settle back down again. 

“We are advising our clients to just get what you need at the moment- no more, no less. You can't short cut, as you get out what you put into your crop.” 

TGT's business development manager Brian Rowling said there had been a growing trend amongst growers to conduct more soil sampling and plant tissue analysis tests before placing their fertiliser order, to ensure they were applying only what was necessary. 

“Nobody wants to end up with a shed full of dear fertiliser. I've also noticed the popularity of composting and mulching has increased recently. Some ag chemicals have become more expensive, but at least supply issues are starting to fl atten out and catch up. I don't think the situation with fertiliser will improve much however, between now and Christmas,” he said. 

After a century and four generations of farming at Kairi, Jack Stockman of Stockman Farming FNQ, said farming was still a hard game to be in. Jack and Kate Stockman use around 100 tonnes of urea a year growing seed crops, avocadoes and peanuts. 

“We pre-bought a bit of urea at $1400 a tonne and were using it when the market had climbed to $1800 a tonne, but have had to buy more at peak levels. It’s been hard convincing our buyers we needed more for the seed we produce,” he said. 

“Because the merchants were short of brachiaria this year, we stuck to our guns and managed to get the price up by $100 a tonne to help cover some of the costs. We could try organic farming, but we have to get that initial hit from the urea to produce the even seed crop we need. 

“Hay sales have been pretty slow the last couple of seasons too, but because we have sheds, we can store 15,000 round bales and just wait until people are ready to pay for it. The seed is our main industry, we can sell the hay as mulch to orchards or just put it back into the ground if necessary. 

“Peanuts have been a good price. You can get a $1400-$1500/tonne contract from Bega now, which is up about $500 to $600/tonne on a couple of years ago. Our peanut crop is six weeks off harvest now and desperately needs rain.” 

Cotton, cattle and avocado growers, Brad and Natasha Jonsson of “Wombinoo Station”, Mt Garnet have already used 500 tonnes of fertiliser across their operation this year. They pre-ordered around three quarters of that last year at $980 a tonne, but have since paid up to $1425 a tonne for it. 

“There's not much you can do. You can't cut any corners, because when you cut fertiliser rates, you lose crop yield and once prices rise this dramatically, they rarely go back. I was paying $788/T this time last year,” Mr Jonsson said. 

“Thankfully cotton prices are also through the roof at the moment. The early stuff I had locked in averaged $725 a bale compared to last year's average of $630 a bale. It may go even further north yet this year, which will off set a bit of the avocado and input cost pain.” 

Without fertiliser, production from the Australian agricultural sector would drop by an estimated 28 per cent or $12.7 billion. Productivity improvement due to fertiliser use supports 107,000 workers in agricultural industries and 300,000 across the economy. 

On the upside, the Australian economy is an open and competitive market place and market forces should bring prices back into line with new benchmarks when these prices eventually drop. But the three-month lead time from ordering product, to taking delivery could retard that process to some degree.

Advertisment

Most Popular

1