Driving down input costs high priority on Grain Producers Australia’s Federal election wish list

Given a Federal election is looming, Grain Producers Australia’s board is sharpening its policy priorities with a focus on lifting not only the industry’s value, but also calling for government backing for initiatives that will drive down input and production costs for growers.

Some industry analysts estimate the Australian grains industry is worth $13 billion.

But last harvest produced a record return estimated at about 61.9 million tonnes of grain, valued at more than $22 billion.

This was achieved despite growers fighting to control the profit-eating threats of frost, mouse plagues, labour supply shortages, floods and storms damaging crop quality — with reduced prices during harvest — as well as the typical challenges and fluctuations any season throws up.

With the escalating conflict between Russia and the Ukraine, and after two years of COVID-19 disruptions, these external supply chain influences — and others like them — will continue to have significant and unexpected consequences for Australian grain producers.

In addition to all of this, input prices have also escalated significantly and growers face the real risk that, even if it does rain and there’s a crop to harvest, grain prices need to remain as high as they have been in recent times to absorb these mounting economic pressures.

According to figures supplied by Thomas Elders Markets, the price of Monoammonium phosphate (MAP) fertiliser from 2017-2020 was $544 per tonne on average. It has now climbed to $1350/t. Urea from 2017-2020 was costing $405/t. But recent pricing has it at $930/t.

For glyphosate, the average price per litre from 2015-2020 was $4.12. But recently it has almost tripled to $9-12/litre. For diesel, the average price paid from 2015-2020 was 119 cents per litre.

But more recently it has struck 164 cents per litre.

That’s why GPA’s election priorities will prosecute initiatives aimed at reducing core input and production costs for Australian grain producers.

Support for these projects and programs — with targeted investments to increase local manufacturing — will help to limit our exposure to supply chain risks and vulnerabilities due to external factors.

More needs to be done to capture greater profitability for growers to help build long-term resilience and reduce volatility, therefore helping producers and their communities manage drought and other seasonal fluctuations.

A prime question in GPA’s 2022 Federal Election Survey was whether the Federal Government should invest more to support local manufacturing to increase local supply of key farm inputs, with the vast majority of respondents stating the obvious answer of “yes”.

Example responses included:

• the agricultural industry at the present time relies too much on imports from other countries, which is reducing farmers’ profits and making them vulnerable;
• keeping things local reduces costs at so many levels, increases support for local communities and economies and then overall the environmental impact is also reduced;
• critical control points in food production must be protected from geopolitical risks;
• and we need to ensure we are not at the mercy of political trade decisions by other countries.

While support for increased local manufacturing may be obvious, it won’t be an immediate solution.

However, if we’re not telling the Federal Government this is essential to protect the interests of farmers and our communities, it may be too slow to act — especially in areas where it can deliver immediate support.

These include an enhanced investment landscape; business project planning; cohesive environmental laws; tax benefits; and other incentives.

Other priorities submitted in GPA’s 2022 Federal Election Survey on where government can support the productivity and profitability of grain farming business included:

• Trade and market access (60 per cent)
• Agricultural red tape/industry regulation (48.9 per cent)
• Transportation infrastructure/freight costs (44.4 per cent)
• Market competition and transparency (42.2 per cent)
• Digital connectivity (40 per cent)
• Biosecurity (37.8 per cent) and
• Farm labour/workforce (33.3 per cent)

GPA is also calling for more government backing for projects and incentives to increase local manufacturing opportunities with value-adding potential.

In particular, this could be growing more soybeans in Australia to produce the protein concentrate needed to help strengthen the plant-based protein product sector’s capacity to source its products from Australian-grown produce.

While there are multiple ways the Federal Government can deliver these outcomes, a high-level, strategic cost-benefit analysis of local manufacturing for essential farm inputs — versus continuing to import these products from other countries — is a great starting point to inform policy and drive investments.

In particular, this will help to minimise our over-reliance on overseas supply of the raw ingredients needed to manufacture farm chemicals and fertilisers, and lower these costs to farmers.

Barry Large is the chair at Grain Producers Australia