Rabobank analyst Vitor Pistoia.

FARM fertiliser “affordability” is starting to improve across the globe, with a likely recovery in application in some regions in 2023, according to a recent Rabobank report.

In most cases, global demand will take some time to return to pre-pandemic levels; However in Australia, the drop in farm input prices is greater than that of commodity prices, and this is slowly improving farmers’ buying power, Rabobank analyst Vitor Pistoia said

Rabobank’s Semi-annual Fertiliser Outlook report said in Australia, in recent years, fertiliser demand had grown despite the price hikes, as the country enjoyed good seasonal conditions and a surge in grain and oilseed production.

“Every year since 2020, G&O (grain and oilseeds) yields have exceeded the previous year’s production, with 2022 winter and summer crop seasons combined reaching an historically high 72 million metric tonnes, a 130 per cent surge, Mr Pistoia said.

“At the same time, cropping area increased 27 percent from roughly 20 million hectares to 25.5 million hectares,” the report said.

Mr Pistoia said good weather driven by La Nina and investments in crop management had underpinned this “phenomenal growth”.

Apparent fertiliser demand in the same period moved from 5.4 million to around 6.6 million metric tonnes, a 21 per cent increase, according to the report.

“Although the conditions for the 2023 crop seasons are a bit different, they do not signal a reversal in the trend of historically-high cropping area and a significant application rate,” Mr Pistoia said.

Fertiliser prices returning to historical averages

Rabobank said most fertiliser prices are gradually returning to their historical averages, after skyrocketing over the past two years due to the impacts of COVID-19 and the Russia-Ukraine war.

The report, titled Improved Affordability Ahead, says global fertiliser prices had begun to trend higher in 2021 due to supply chain constraints resulting from the Covid-19 pandemic.

Affordability deteriorated further when fertiliser prices set new record-high levels after Russia invaded Ukraine, reducing supply from the region and also resulting in higher production costs.

By that time, Mr Pistoia said reasonable prices for agricultural commodities were the only reason fertiliser didn’t become as unaffordable as it was in 2009 during the global economic crisis.

Prices continue to remain above average for a number of agricultural commodities, due to tighter stocks, he said.

“The combination of still-positive commodity prices and lower fertiliser prices is helping fertiliser affordability for farmers.

“Although globally, ‘consumption’ may take two or three years to recover, and the speed of recovery will depend on how long the current positive cycle lasts,” Mr Pistoia said.

More research needed to reduce fertiliser reliance

New South Farmers have welcomed the news of cheaper fertiliser, saying it will have a big impact on the bottom line of its members. But Grains committee chair Justin Everett said more needed to be done reduce fertiliser reliance, such as increasing research and development to help farmers adopt new productivity-boosting technologies.

“Producing more with less inputs are a fundamental way to tackle inflation and relieve the stress of rising input costs, so greater investment in into things like precision agriculture technologies would be a great help,” Mr Everitt said.

“If we can reduce the amount of fertiliser and chemical applications then we’ll be able to produce more food and fibre at a lower cost and get it to consumers at a lower cost, which will reduce cost-of-living pressures.

“Farmers and families are in this together – albeit on different ends of the supply chain – and farmers really appreciate the support of Aussie families.”

Source: Rabobank/NSW Farmers