Australian grain farmers are weathering a "excellent storm" of record-high fertiliser prices which might be anticipated to end in decrease yields and elevated meals costs over the approaching months.
Excessive fertiliser costs – along with excessive diesel and labour prices – are squeezing farm budgets, GrainGrowers, a nationwide group representing arable farmers, has warned.
"The excessive value of fertiliser is having a extremely massive impression," GrainGrowers Chairman Brett Hosking mentioned.
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He mentioned Australian farmers will likely be carefully watching the fertiliser costs throughout the winter cropping season.
Knowledge from Thomas Elders Markets confirmed the price of sending fertiliser to Australia in April 2022 was $1251 per tonne in contrast with $533 per tonne in Could 2021.
The battle in Ukraine has pushed the worth even larger.
Ukraine has deposits of important fertiliser components urea and potash, and exports have been restricted since Russia invaded the nation on February 24.
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Russia can also be the world's largest fertiliser exporter however commerce sanctions have imposed limits on imports into Australia.
Added to the issue is the excessive worth of pure gasoline used within the manufacturing of fertiliser.
Australia imports most of its fertiliser from the Center East, a serious producer of gasoline.
However Thomas Elders Markets analyst Andrew Whitelaw mentioned the gasoline worth has "gone by the roof" because the invasion of Ukraine.
Grain farmers are actually warning value pressures will result in decrease yields on the subsequent harvest.
"Along with the provision chain issues in China – which produces a lot of the world's fertiliser – and now the Ukraine struggle, it has been an ideal storm," Hosking mentioned.
Whereas excessive grain costs and moisture ranges are giving growers confidence within the present rising season, this will likely change in coming months.
Larger fertiliser costs imply the grower is taking an ideal danger in recovering the prices.
"The stakes and danger profile of the growers change into a complete lot larger," Hosking mentioned.
He's involved that regardless of beneficial situations, due to value pressures grain farmers will "attain some extent of diminishing return" in yields of wheat, barley, oats, canola and different grains.
And the strain on farmers will feed into costs on grocery store cabinets, particularly the worth of chicken.
Corn fed to chickens and pigs helps animals placed on weight shortly and is without doubt one of the largest bills in livestock manufacturing.