Rising prices could dictate nitrogen use

Shannon Beattie
By Shannon Beattie
December 9 2021 - 11:00pm
High fertiliser prices are front of mind for growers right now

WITH fertiliser prices still sky high, growers are weighing up whether they will use less nitrogen in 2022, even though it would likely reduce yield potential.

High fertiliser prices are front of mind for growers right now and need to be managed properly, however many are holding out and hoping for prices to drop.

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WAFarmers grains section president Mic Fels said he hadn't priced his urea yet and was hoping the market would settle down before he has to.

"The issue is going to be whether the market corrects itself in time for when we need our urea next year," Mr Fels said.

"I think most people's thinking at the moment is get enough to get them through seeding and guarantee they can get the crop in and then hope the price drops after that."

However, the issue with that line of thinking is that growers will be reliant on fertiliser companies getting stock in, without orders having been placed.

Add on to that the supply chain issues that currently exist, meaning no guarantee of product availability, and it's a perfect story for an uncertain future.

With that in mind, Grain Producers Australia met with State policy managers, including WAFarmers, late last month to discuss and assess the impact of fertiliser prices on grain producers, especially short-term decision-making, for next year's crop.

GPA chairman Barry Large said the meeting highlighted the need to reinforce key messaging to growers, to improve awareness and understanding of the current situation.

"In particular, it's important for growers to plan ahead and obtain independent advice from accredited agents, such as advice on soil testing, to help make informed decisions," Mr Large said.

"Grain producers are always best placed to understand their own businesses and manage their individual circumstances accordingly."

Over the past 10 years, yields in WA have escalated significantly and most of that can be put down to the fact that growers are using a lot more nitrogen than they used to which is paying dividends.

However, Mr Fels believes if the price of fertiliser doesn't drop, it's guaranteed that growers will use less nitrogen on their crops next year, which ultimately reduces yield potential.

"In terms of the economics, I think it will still pay to use the nitrogen that you need to get the max yield potential, but it means you will make a lot less profit and it's as simple as that," he said.

"I think the majority of people will stick to their same programs, but they might swap to more legumes or other crops that don't need as much nitrogen used on them and for me personally, we might put in an extra couple of paddocks of lupins.

"However, in marginal areas, if growers get a bad start, they might take country out because the cost of inputs are too high."

GPA also wrote to Federal Minister for Agriculture David Littleproud with an early warning in September, expressing concerns about sharp rising fertiliser prices.

That correspondence urged the Australian Government to invest more in local manufacturing options to help secure greater volumes of local supply, as well as to provide that long-term support and investment to boost local supply for other essential farm inputs, such as pesticides.

In late October, GPA followed up these calls by holding a Green Fertiliser Industry Roundtable involving senior Federal ministers and representatives of the Australian grains and fertiliser industry.

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"GPA will continue advocating the long-term advantages of using modern technologies to increase domestic manufacturing and local supply of cheaper, cleaner fertiliser products such as urea, to help boost the sustainability and profitability of Australian farmers," Mr Large said.

"Increasing local supply of fertilisers and other farm inputs also benefits Australian producers by reducing biosecurity risks, because less product is needed to be imported from overseas."

Farmers obviously want fertiliser prices to drop and there is no denying that the current pricing is going to impact everyone's profit margins next year.

However, while there are always exceptions, 2021 has been remarkable for almost everyone in WA, which Mr Fels believes does at least set growers up well for a high input year.

"We effectively had low input prices at the start of this year and now high output prices, which is the perfect scenario, whereas next year we have high input prices and who knows what the output prices will be," Mr Fels said.

"It makes sense to look at that from a financial year perceptive, rather than a calendar year, and from that perspective, we're coming off a big year with big prices and going into a year with big input costs, so really the two negate each other pretty effectively.

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"So long as the following financial year is also in-sync, then it might not be as bad as we all think and it's a glass half full way of looking at it."

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