Australian consumers could see their food bills jump and even face food shortages as soaring fuel prices push the price of farm fertiliser sky high.
The problem stems from an international fuel shortage, with prices of the two main sources of energy used to produce fertiliser – natural gas and coal – going through the roof.
In Europe, some natural gas price indexes have risen by up to 895 per cent and these higher costs are wreaking havoc with industry and households exposed to the rising cost.
The high energy prices have hit some of Australia’s biggest international suppliers, who have consequently acted to safeguard supplies for their own domestic markets.
Australia previously imported 60% of both monoammonium and diammonium phosphate fertilisers from China, but in an effort to protect its own food supply China has restricted fertiliser exports, while Russia has imposed a quota for similar reasons.
Australian farmers say fertiliser makes up 30 per cent of their costs, but the price has now risen from $750 a tonne in May to an expected $1500/t for next year’s planting.
They fear import restrictions mean that not only will they be unable to source fertiliser at a reasonable price, they also may not be able to get it at all.
The AWU has long pointed out the important role gas has in supporting manufacturing, with calls for steps such as a gas reservation policy and fewer barriers to opening up new sources of domestic gas supply.
But this is now going beyond jobs, and is spreading to the food we eat.
“Australia is one of the most gas-rich nations in the world, but instead of using that wealth to provide affordable energy to our manufacturers, we’ve given multinationals a no-strings-attached licence to pump it offshore to power jobs overseas,” Dan Walton, AWU National Secretary, says.
“We should have cheap gas here but are being forced to pay for it at sky-high global prices.
“Local manufactures are lucky enough to operate in a country with abundant gas, they just need their governments to introduce measures to shore up affordable supply.
“Now government inaction has spilled over into the farm sector, and by not ensuring cheap and reliable gas supplies we are likely to see Australian grocery bills rise and, inexcusably, even see food shortages.”
The situation is so dire that local fertiliser maker Incitec Pivot just announced it will cease production at its Brisbane-based Gibson Island plant at the end of next year, after exhaustive efforts failed to secure an affordable long-term gas supply from Australian gas producers.
Year-to-date gas prices in Queensland are running at about $10.65 a Gigajoule, compared to just $6.32 last year.
IPL said after 50 years of continuous production and reinvestment at Gibson Island, the company was disappointed it was unable to secure affordable feedstock gas for the plant.
“We kept our promise to pursue every possible avenue to continue with gas as a feedstock for our manufacturing operations at Gibson Island, but despite significant efforts over recent months we have been unable to secure affordable gas supply beyond the end of our current gas contract,” it said.
“We are deeply disappointed that this will impact our loyal employees and their families.”
IPL plans to focus on a green ammonia feasibility study at Gibson Island to potentially re-purpose the site for the future.
Industry representatives and politicians recently held talks to discuss the potential for domestic manufacturing of cheaper and greener fertiliser.
Fertiliser manufacturer Strike Energy is aiming to use hydrogen to produce a greener fertiliser by developing a plant at Geraldton, in Western Australia’s northern wheatbelt.
But this is a long-term solution which will do little to soften the pain Australians are likely to feel at the checkout.
“Industry experts say producing fertiliser using green hydrogen could take up to five years, which will not help us put food on the table next year or for years after that,” Dan Walton says.
“The pandemic gave us a glimpse of a world where we couldn’t buy all the things we needed, due in part to supply chain issues.
“Unless we move ahead with a domestic gas reservation scheme and open up new gas supplies, Australian’s are in for a very grim future.”
