Fertiliser co-operative could avoid future supply chain woes as input security continues

The global geopolitical uncertainty that has sent shock waves across supply chains, in particular fertiliser, has highlighted Australia’s reliance and vulnerability on offshore manufacturing and supply imports.

The eruption of conflict in the Middle East in late February has forced private enterprises, and the State and Federal governments to take measures in securing adequate supplies of fuel and fertiliser for farmers heading into their winter crop — exposing Australia’s heavy reliance on imports for inputs.

UWA business professor Tim Mazzarol said the weakness in Australia’s import reliance had been known since at least 2021, when urea exports out of China were restricted and almost closed down the national road freight system when AdBlu supplies were cut off as a result.

He said a fertiliser cooperative could provide a laser focus on providing input levels and stabilising pricing for farmers — and could eventually turn to manufacturing, further reducing the need for offshore imports.

“There’s a lot of producer cooperatives in all sorts of different industries, all of which need fertiliser,” Mr Mazzarol said.

“Their primary motivation is make sure that their members are able to keep their business alive, and when fertiliser is unavailable or very expensive, that puts a big risk on the overall business model of the farmer.”

Australia imports the vast majority of its urea supplies from offshore, particularly out of the Middle East region. A domestic cooperative in the control of local farmers could ensure supply security, versus a private enterprise aimed at achieving dividends for investors.

“The focus wouldn’t be on maximisation of investor returns for people not even using the fertiliser and just wanting to make a profit,” Mr Mazzarol said.

“It will be focused on making sure that in addition to getting some good returns from a well-run business, that it is also delivering value in a financial and service provision, which includes the security of that supply.”

WA growers that were left scrambling after fertiliser giant CSBP’s decision to declare on UAN contracts in late March, were pushed to consider either alternatives — if available — seek supply elsewhere, or reduce their crop accordingly.

CSBP, which provides about 40 per cent of the State’s fertiliser market, last month announced they would be offering Flexi-N and NS51S, a granular nitrogen alternative — securing enough to confirm March, April, and May orders, and 40 per cent of contracted quantities for June and August orders.

But uncertainty still surrounds future fertiliser supply security as the Strait of Hormuz remains effectively closed for trade.

Mr Mazzarol warned Australia’s lack of independence on fertiliser supply placed the whole country’s food security at risk.

“It (fertiliser) is an essential ingredient for providing food and allowing us to produce that, and if the price is exceptionally high, or if its unavailable then our whole food supply, our whole ability to produce, and the rural sector, is negatively impacted,” he said.