Input Cost Pain a Massive Problem

Article by: Hari Yellina

As smart as Australian farmers are, there’s a low chance they’re working on a time machine down the shed. Anyone who declares they’ve returned from the future will be received with wary stares and the assumption that they’ve been swigging hand sanitizer once more. A time machine would be a useful tool for producers at this point. Not so much to predict future global events or how many seasons of Farmer Wants A Wife will air, but to track farm input price increases. COVID’s consequences, as well as the conflict in Ukraine, are having a global influence on Australian farms. Fuel and fertiliser are two of the most significant.

According to the Australian Institute of Petroleum, terminal gate diesel prices touched an all-time high on March 11 by a significant margin. Diesel and gasoline are near-essential components on any farm, thus any increase will put a strain on growers. Russia is preserving its domestic fertiliser supply, so ammonium nitrate exports to the rest of the world will decrease, if not stop entirely. Despite record increases in farm input costs, vegetable and potato prices have stayed steady over the past two years, according to a recent Ausveg Advocacy Update.

Retail prices for vegetables have stayed at pre-pandemic levels, but growers are facing rises of more than 40% in fertiliser, chemical, and gasoline expenses, as well as increases of more than 50% in fertiliser, chemical, and fuel costs. The cautions about inputs were clearly stated at the recent Citrus Technical Forum 2022 on the Sunshine Coast, where various speakers provided overviews of the current situation and what might be in store in the future. The situation in Ukraine, according to Rabobank senior analyst Mick Harvey, will drive up fertiliser prices in the short run.

Matt Strmiska of EE Muir & Sons noted that because Australia is such a small player in the global agricultural economy, any actions made elsewhere have repercussions here, no matter how efficient we are. Scott Matthews, national sales and marketing manager at Campbells Fertilisers, had a similar perspective, stating that most essential fertiliser ingredients are expected to track at high prices this year. However, how far ahead can growers plan? Not all cropping programmes are adaptable enough to wait for a price decrease or even to withstand a price increase. The time machine would be useful in this situation. Regrettably, such thinking belongs in the realms of science fiction. It’s hardly a pleasant way to end a piece, but the straightforward and ominous counsel from those in the know appears to be: brace for pain.