Winter grain crop under pressure as fuel and fertiliser shortage hits at crunch time
Daniel Linklater says uncertain access to fuel and fertiliser has eroded confidence in the season. (ABC Rural: Timu King)
In short:
Farmers are facing fuel and fertiliser shortages just as they are starting to sow their winter grain crops.
Early autumn rain has provided ideal conditions in southern states, after challenging seasons in recent years.
What's next?
Farmers are warning that increased food costs are inevitable.
The double hit of soaring fuel costs and fertiliser shortages could not have come at a worse time for Australian grain farmers.
After a series of tough, dry years in southern states, an early autumn break brought hope of a less stressful season.
But just as machines roll onto paddocks to start sowing the winter crop, the Iran conflict disrupted supplies of diesel and urea.
"We need fuel to plant the crop. We need fertiliser to feed the crop," north-west Victorian farmer Daniel Linklater said.
"We can't actually be sure at this point that we're going to have the full amount of resources that we want."
Robinvale, in Victoria's north-west, ran out of fuel last weekend. (Supplied: Nathan Valvo)
The conflict in the Middle East has pushed up the world oil price, which has led to higher fuel prices and panic buying in Australia.
Supplies to regional and rural areas in particular have been stretched, with some towns running out.
The war has also disrupted the supply of urea fertiliser.
Farmers trying to take advantage of rain
On Mr Linklater's farm near Mildura, the big dump of rain in early March kicked off his cropping season early.
"It's quite unusual to have this amount of subsoil moisture so close to the start of the season," he said.
Mr Linklater is now trying to make sure he has enough fuel and fertiliser to "take advantage" of the rain and get his crop in.
"[Fuel] distributors are sort of assuring us that, you know, there's fuel on the water, it is making its way here," he said.
Farmers need fertiliser to help crops grow. (ABC Rural: Clint Jasper)
As for fertiliser, he tried to get a price for a delivery in April, but it was not possible.
"Many of us [farmers] are in the same boat just trying to think our way through," he said.
Mr Linklater said he was concerned about the flow-on effect of the disruptions.
"We must be able to plant crops to be able to produce grain," he said.
"Without grain, you can't feed the beef and the lamb and the chickens and everything else that we love to eat."
He cautioned that food prices would inevitably rise, but farmers would not be paid more.
"That's going to hit everybody at the supermarket," Mr Linklater said.
Farmers store fuel on their farms so they can easily top up machine tanks. (Supplied: Grain Producers Australia)
On-farm fuel storage needed
Grain Producers Australia (GPA) is calling for policy changes and investments to ensure farmers have the fuel and chemicals they need to grow their crops.
It also wants the federal government to prioritise tax incentives to boost on-farm fuel storage capacity.
"A good crop is determined by timing, not by supply of fuel and fertiliser,"GPA chair Barry Large said.
"In the short term, tax incentives are a simple option that can make a big impact.
Mr Large said the $26 billion grain industry was "entirely reliant" on producers being able to put the crop in the ground.
"Without fuel, our vehicles will sit still in the yard," he said.
Barry Large says farmers need more on-farm fuel storage. (Supplied: Grain Producers Australia)
Wheat prices flat
When Russia invaded Ukraine in 2022, fuel and fertiliser prices soared, but the value of commodities such as wheat also increased.
"One-third of global wheat exports were affected [in 2022]," agricultural analyst and author Dennis Voznesenski said.
"There were higher costs for farmers [worldwide] but also higher revenues."
But Mr Voznesenski said that, unfortunately for farmers, this war was different.
"Iran is not an exporter of wheat," he said.
"The situation in the Strait of Hormuz is impacting fertiliser and fuel, meaning for farmers it's just higher costs."
Premium wheat is currently about $330 a tonne in Australia, compared to more than $460 a tonne in 2022. (ABC Rural: Amelia Bernasconi)
Farmers looking for alternatives
Horsham-based fertiliser supplier Travis Hair said the urea shortage was causing "angst" and "uncertainty" and farmers were looking for other options.
"Over the last few days, we've been selling a lot of sulphate of ammonia," Mr Hair said.
"The nitrogen in sulphate of ammonia is about half of what's in urea, plus it's got sulphur in it.
"At the moment, it's probably the most affordable option for nitrogen that's actually on the market."
Travis Hair says the urea shortage is hitting hard. (ABC Rural: Angus Verley)
Mr Voznesenski said Australia was also about to find itself in competition with farmers in the northern hemisphere for urea.
"Their winter wheat is about to start coming out of dormancy and those crops [in the northern hemisphere] will be nitrogen hungry," he said.
"They're going to be just as desperate as we are to get fertiliser into the country, which will push up prices."
Urea prices have jumped significantly during the Iran conflict. (ABC Landline/Episode3)
Concern high prices will continue
Dan Bingham, a large-scale sowing contractor in Victoria's west, uses thousands of litres of fuel a day in his seeding rigs.
But as the shortages and price hikes hit, he has been forced to make adjustments.
"The farmers normally supply the fuel, but in this case this year, there might have to be some other options," he said.
Mr Bingham said fuel costs would not be the only problem, with "everything else hooked into our ecosystem" set to be affected.
"It'll be a bit like the COVID where it sort of went on and on for a fair while,"Mr Bingham said.
"Companies [are] pretty quick to put prices up and very slow to bring them down."
Additional reporting by Timu King and Angus Verley.