Farm leaders back farm management deposits to fund fertiliser plants

Leaders say farm management deposits could provide capital for projects — such as the construction of fertiliser plants — that would support the ag industry.

Billions of dollars tied up in Farm Management Deposits could be used to fund fertiliser plants in Australia, according to farm leaders.

A number of fertiliser plants are at various stages of development in remote regions of Australia but will require billions of dollars in capital for construction.

Verdant Minerals is planning a $2 billion ammonium phosphate fertiliser plant 200km southeast of tenant Creek in the Northern Territory, while Strike Energy requires $2.2 billion to build a urea manufacturing operation at Geraldton in Western Australia.

Farmers should consider sinking cash stored as farm management deposits into fertiliser manufacturing plants, according to farm leaders.

South Australia’s NeuRizer, formerly known as Leigh Creek Energy, has received a jump start on its competitors, with South Korean partner Daelim helping it to secure 70 per cent of the $1.5 billion require to get its urea operation going at Leigh Creek, north of the Flinders Ranges.

On top of that, there are a number of potash fertiliser operations in development in the desert regions of WA.

Currently, the nation’s farmers have $5.3 billion tied up in Farm Management Deposits.

Nearly, $4 billion has been stacked away by grain growers and the sheep and beef industries.

Grain Producers Australia director Andrew Weidemann said FMDs were a potential source of funding for fertiliser projects given they were a key to Australia’s prosperity.

“If the right and sensible approach was used, that overall portfolio of money sitting in FMDs could be used to reinvigorate agriculture,” Mr Weidemann said.

“The past three years have changed a long of people’s thinking in this area.

“I think if using FMDs with the right vigour about it, then it should be done.”

NSW Farmers acting president Xavier Martin also backed using farmer cash tied up in FMDs for fertiliser plants.

Mr Martin said the past two years had demonstrated farmer vulnerability to supplies of fertiliser, chemicals and fuel.

“We are so exposed to offshore sources of these inputs that our vulnerability is showing up in our farm balance sheets,” Mr Martin said.

“You have to ask whether a fund like FMDs can be applied in a better manner to underwrite these projects.

“It could be as simple as providing foundation capital.

“Or it could mean grandfathering a line of credit to give others confidence to invest.”

Verdant Minerals managing director Chris Tziolis said farmers should invest in fertiliser plants to support their industries.

“Projects such as these are meeting a national need and Australian super (superannuation) funds, the Future Fund and Farm Management Deposits should invest,” Mr Tziolis said.