Supply chain issues are presenting another challenge for Australian farmers as urea and glyphosate shortages continue.
The shortages have largely been caused by issues with Chinese manufacturing plants affected by a myriad of issues including flooding and COVID-19 outbreaks which have seen entire factories shut down and a significant shortage of workers.
Manufacturing delays and congestion in Chinese ports has further restricted the supply of glyphosate, while strong demand from Australian buyers reduced local stockpiles, leading to a significant increase in price.
“The price of our main knock-out herbicide Roundup has more than doubled to over $10 a litre and that was over just a six-week period,” said Stuart Barbary, cropping and livestock farmer from the Midlands in Tasmania.
“At these prices, we’re looking at $500 to $600 more a hectare so you’ve either got to limit your inputs and try to hold the crop that way or run your program as normal and cop the extra.”
“Yes, commodity prices are good, but if they turn around suddenly we’ll be operating on extremely thin margins,” he added.
Issues with the availability of urea and AdBlue have largely been driven by China – the world’s largest manufacturer of urea – which has restricted the amount of stock sold overseas in a bid to keep domestic food prices under control. Add to that the impact of panic buying and the rise in online shopping, and the increased pressure on the trucking industry has reduced stocks for the Australian industry.
Australia to Establish Plant in Wake of Urea and Glyphosate Shortages
In an effort to become less reliant on international supply, the federal government has signed an agreement to support Incitec Pivot to establish a urea plant the Gibson Island Fertiliser Plant in Brisbane, which was due to close in 2022.
“The ramping up of production by Incitec Pivot will be done without impacting agricultural fertiliser supply to local farmers or disrupting local distribution chains for AdBlue,” said Energy minister Angus Taylor.
“This agreement is another important part of the Government’s broader strategy to build supply chain resilience, which includes addressing shipping issues, ensuring local supplies of critical products and bolstering local manufacturing capability.”
While Prime Minister Scott Morrison said that the deal represented a short term solution to the AdBlue shortage, National Farmers Federation CEO Tony Mahar welcomed the announcement.
“This is a welcome relief to potential supply disruptions to AdBlue that is used in some farm machinery and on-road vehicles used by farmers.”
“Along with the stock already on hand, new shipments secured in the last month, and domestic capabilities coming online, farmers and the agricultural sector can move back to a business as usual approach without the fear of supply chain disruptions.”
Data released from Thomas Elder Markets shows that urea prices remained around $400 per tonne from 2017 until the beginning of 2021, with an increase to $1400 per tonne.
Andrew Whitelaw, Manager of Market Insights said that the demand for urea had also exerted pressure on the price and availability of DAP.
“Since September last year, DAP/MAP is up 55 per cent, and 170 per cent since November 2020,” he said.
Shipments of DAP from Morocco have eased supply concerns, but are likely to cost Australian farmers between $1200 – $1500 per tonne.