Nufarm boss says Australia must catch up to farm-grown avgas boom

Nufarm chairman, John Gillam, wants the federal government to urgently broaden its zeal for cutting greenhouse gas emissions and promoting electric cars and renewable energy, to also include growing new generation biofuels to decarbonise the aviation and marine industries.

"We have a narrow window of opportunity to achieve this before Australia falls too far behind other countries who already have policies successfully attracting investment to scale up their industries," he said.

Nufarm's seed technology division, Nuseed, lifted earnings by 67 per cent in 2022-23, partly on the back of its emerging non-food oilseed, carinata.

Nuseed is also breeding and growing high biomass energy cane in Brazil and plans to introduce it to Australia for next level ethanol production.

The canola-like carinata crop has been grown commercially in Argentina and the US in the past few years, to meet fast rising demand for sustainable aviation fuel.

This year contracted plantings should expand to France and Spain to help meet burgeoning demand for the oilseed used in aircraft fuel sold by energy giant, BP.

Overseas production of green aviation fuel and biodiesel is this year forecast to be more than double 2021 volumes, at 41 million tonnes, and up to 45m tonnes by 2026.

Mr Gillam told Nufarm's Melbourne annual general meeting most of Australia's canola exports to Europe already fed the biofuel market because of demand encouraged by incentives for bioenergy production and use in the European Union.

He said Australia's "once in a generation" opportunity to be part of the biofuel production revolution and bolster our own fuel industry, jobs and decarbonisation progress now hung in the balance.

Just as the Albanese Government's response to climate change had been to strengthen greenhouse emissions reduction targets, reform the safeguard mechanism to cut industrial emissions and promote carbon credits, he said Canberra must "be ambitious in harnessing Australia's natural resources and agricultural capabilities".

Mr Gillam said a local renewable fuels industry would also unlock another source of revenue for farmers.

Bioenergy Australia estimated 45pc of the nation's energy use relied on liquid fuels and they would remain a critical energy source for certain sectors, including aviation where electrification and hydrogen power were not viable long-haul route options.

BP has plans to produce up to 10,000 barrels of SAF at its former West Australian refinery at Kwinana.

GrainCorp also has plans to move into the local and overseas aircraft fuel and biodiesel industries, building a new WA oilseed crushing plant, possibly partnering with an energy industry business, to help it develop export opportunities.

With Britain now setting a sustainable aviation fuel (SAF) mandate from 2025, Nufarm wants Australia to also have minimum biofuel mandates on local airlines as part of our safeguard mechanism emissions reduction policy.

Managing director, Greg Hunt, told shareholders Nufarm's 2023 revenue had included its first earnings from energy cane, which, compared to conventional sugar cane, could produce substantial improvements in ethanol and bioenergy output per hectare.

"Over time energy cane has potential to be a significant part of our renewable fuels platform and particularly relevant in hard to abate transport sectors," he said.

With international biofuel demand on track to rise 25pc within five years, he said the technical profiles of carinata and energy cane made them leading contenders in the renewable energy feedstock sector.

They could also provide extra revenue streams for farmers and support long term regional development and national economic growth.

Although long known as an international crop chemical business, Nufarm has been steadily implementing strategies to de-risk its reliance on crop protection earnings via Nuseed investments made in the past decade.

Diversification has included Nuseed's omega 3 canola platform, now supplying its Aquaterra and Nutritera oils for the aquaculture feed and human nutrition markets.

Omega 3 canola seed and product revenue would likely be up to $70m in 2023-24 and at least $140m next year.

Nufarm's need for diversification was emphasised in 2022-23 when the crop protection business copped a nine per cent revenue slide as agricultural chemical companies generally were punished by weaker demand, high supply costs and expensive inventories.

"Some of our peers incurred significant profitability reductions in the tighter market conditions. We outperformed many," Mr Hunt said.

In Europe the company lost about $40m (25m euros) in revenue as new regulations meant some chemical products could not remain registered for agricultural use.

The first half of this financial year would likely be challenging for the chemical division, too, because of a backlog of inventory and the higher costs of goods already acquired.

However, agchem inventories were shrinking, and a reduction in input costs and less volatility in supply chains after the past year's COVID disruptions to active ingredient availability meant the Nufarm group should be profitable by year's end.

"Pleasingly we have seen good rainfall across eastern Australia recently which is expected to lead to increased demand for crop protection products and improved winter crop prospects," Mr Hunt said.

"North American sales volumes have improved as our channel partners begin to replenish stocks for the spring cropping season, although at lower margins."

In Europe Nufarm was confident about new products in the pipeline and organic business growth.