MAJOR Australian fertiliser supplier Incitec Pivot says it is “looking forward” to fronting the Senate Select Committee inquiry into rising fertiliser prices.
The issue is topping the country’s rural agenda because the spiralling cost of one of the most important inputs is seriously impacting on those producers preparing to undertake their winter sowing programmes.
There’s been an immediate response from key rural lobby groups who are worried as to how their members will sustain their incomes in the light of urea jumping from $640/tonne to more than $900/tonne in recent weeks.
"The recent spike followed the imposition of an additional 100pc export tax on fertilisers imposed by the Chinese Government, taking the total export tax to 135pc,” according to Incitec Pivot spokesman Neville Heydon.
“This had the immediate effect of virtually stopping urea exports from China which represented 15pc of the amount of urea traded in the world,” he added.
Incitec Pivot says taking this amount of product out of the market is the reason why global prices were forced up at a time when there’s increasing fertiliser demand as the world moves to head-off food shortages.
Interestingly, the Chinese government’s new export tax on fertilisers is believed to apply up until September of this year.
“No one knows what’s going to happen after that,” Mr Heydon said.
Incitec Pivot says it has presented its submission to the Senate but is yet to appear before its inquiry.
“That’s our opportunity to address the issues that are being raised and we are looking forward to the opportunity to re-butt some of the claims,” Mr Heydon said.
“While they have not yet set a date, we want to inject facts into the debate,” he added.
The point being stressed by Incitec Pivot is that urea is an internationally traded fertiliser which is subject to global supply and demand pressures.
In the meantime, the company believes farmers must look closely at their fertiliser application rates - to ensure they are “getting their economics right” in relation to commodity prices.
In its submission to the Senate Select Committee and the ACCC, Incitec Pivot underscores that about half of the fertiliser spread by Australian farmers is imported, maintaining global benchmark pricing ensures competition is maintained between suppliers - both importers and local producers.
Because Australia represents less than 1.5 percent of global fertiliser consumption, it says local factors have little impact on global trading outcomes.
Mr Heydon said that the fertiliser market in Australia had also been affected by a changing pattern in ordering nutrients for the coming winter crop.
“In light of the improved seasonal prospects, farmers and distributors are ordering fertiliser much earlier than normal to secure product availability and lock in price in the face of global increases,” he said.
“We are hopeful these inquiries will increase understanding of the global forces at play on pricing and supply and the impact of this in Australia,” Mr Heydon added.
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