Farmers fear double whammy of rising fuel and fertiliser costs from Middle East conflict

Federated Farmers arable chair David Birkett. Photo / RNZ, Conan Young

By Sally Murphy of RNZ

Farmers are getting nervous about the rising cost of fuel and fertiliser, with the impact already being felt on-farm.

The conflict in the Middle East has pushed up the price of oil, which has been reflected in the price at the pump in New Zealand.

While the spot price of urea has jumped since the war began, retail prices in New Zealand have remained stable as the big fertiliser companies assured farmers they had enough product to cover the busy autumn period.

Federated Farmers arable chair David Birkett said that for arable farmers it was a double whammy, as they used a lot of fertiliser to grow crops and then diesel in their harvesters.

“At the moment we’re busy in the middle of harvest, so we’re using combine harvesters and a large machine like that will use about a thousand litres of fuel a day,” he said.

“Then there’s trucks and tractors on top of that – so if we see an increase in price of $1 or even 50 cents a litre, that’s $2000 to $4000 extra a day.”

Birkett said farmers were already feeling the pinch of rising fuel prices but were eagerly watching to see what would happen to the price and supply of fertiliser.

“The key word at the moment is uncertainty because we don’t know how long this is going to go on for.

“We know there is enough supply in the country for autumn, I guess for us it depends if the war continues, how this will hit us in the spring.”

He said farmers were starting to hear from their fertiliser suppliers but were nervous about two things: the price and supply.

“There have been shortages before, and farmers can use different products; they normally are more expensive, but we have never got to the point where we’ve run out of fertiliser.

“Farmers should start planning ahead – talk with their fertiliser companies to give them an idea of what demand will be like come spring time.”

Fertiliser company Ballance Agri-Nutrients said it did not know what impact the escalation would have on price.

Chief executive Kelvin Wickham said the company had already seen significant price increases leading into this conflict, and given this latest escalation and the market’s reaction, it anticipated more.

Ballance Agri-Nutrients chief executive Kelvin Wickham.

“Upcoming shipments are mostly subject to pricing at time of shipment, as a commodity, fertiliser pricing experiences movements similar to the imported oil market.”

He also encouraged farmers to plan ahead: “Thinking ahead and creating a plan early will help us make sure we have what they need, when they need it.

“The uncertainty caused by the situation in the Middle East highlights how critical local resilience is for New Zealand. In an increasingly uncertain global environment, secure access to fertiliser matters for farmers and for the wider economy.”

Wickham said Ballance’s Kapuni gas to urea plant continued to be active in the gas market.

“We’re becoming more assured about the likelihood of securing longer-term supply.

“Our priority remains very much on maintaining locally manufactured nutrients as part of the nutrient supply mix and preserving future options.”

- RNZ