Farmers have reacted to diesel price and supply uncertainty by stockpiling fuel on farms

Farmers are turning to creating fuel reserves on-farm to ensure tractors keep running as they prepare to harvest this year’s winter crops.

Farmers are stockpiling thousands of litres of fuel on-farm amid high diesel prices and supply uncertainty, as the industry prepares to harvest the nation’s fourth-biggest winter crop on record.

Victorian Farmers Federation Grains Council president Ashley Fraser said while fuel stocking had increased on farms in recent times, it had significantly accelerated this year as supply issues hit the industry.

“The one thing we cannot do without, at the critical times of sewing and harvest, is fuel. More and more farmers are storing enough diesel on farms to get through those periods, some are buying by the B-double load,” he said.

VFF Grains president Ashley Fraser.

“It is about risk management. We once thought fuel would always be a phone call away, but now we are thinking what if we cannot do that? It is a very real possibility when we are already in a fuel crisis.”

Defence minister Richard Marles last month said he may increase Australia’s mandatory minimum onshore fuel storage levels as parliamentary research found the nation had only 58 days’ of emergency fuel in storage, under two-thirds of the international standard of 90 days.

Diesel supply and pricing is determined by international markets and set to worsen as Europe deals with an energy crisis triggered by sanctions placed on Russia that have led to increased energy prices and inflation and gas shortages. The lifting of Covid restrictions have also fuelled international demand for diesel.

The Weekly Times reported last week that sky-high diesel prices were taking a toll on the farming sector, driving up supply chain costs and causing a cashflow crisis.

The Australian Competition and Consumer Commission quarterly petrol report found average retail diesel prices in the five largest Australian cities for the June quarter was 207.3c a litre.

This was an increase of 21.9c/litre from the March quarter average of 185.4c/litre.

Deputy PM Richard Marles, pictured with Senator Penny Wong, has said he may increase the nation’s offshore fuel storage. Picture: NCA NewsWire/Martin Ollman

Fuel price has hit a 14-year high this year in real terms.

Wimmera grain grower Ryan Milgate some farmers were buying 20,000 litres and others hundreds of thousands of litres relative to business size and needs.

“We shouldn’t have to do that, but people were creating their own fuel security when the price of diesel shot up earlier this year and the same thing is happening now,” he said.

“We operate within a fragile supply chain, with minimal reserves in Australia, and we can be very exposed, very quickly.”

The situation is set to worsen after September 28 with another bowser price spike as Australia’s temporary fuel excise tax cut, currently 22c/litre, is restored to its pre-Budget level of 44c/litre.

The VFF have been campaigning for agriculture to be classified as an essential user of fuel if rationing was needed during a liquid fuel emergency.

Those currently exempted include the ambulance, police and corrective services, along with public transport and taxi operators.

“When Covid hit food security was front and centre and farmers were put on a pedestal, but we are still not classified as an essential user,” Mr Fraser said.