Israel-Hamas war has farming sector on notice

The Israel-Hamas war has created uncertainty for fertiliser and diesel prices. See the early insights here.

Farmers are bracing for further input price spikes for diesel fuel and fertiliser due to the current conflict between Israel and Hamas.

Oil prices increased up to 4 per cent immediately after the outbreak of the conflict in the Middle East at the weekend, and those in the farming sector say the actual cost is yet to play out at the bowser.

Australian farmers say the price increase in oil this week is yet to be felt at the bowser.

The benchmark Bent Crude is $US90.94 a barrel, and US West Texas Intermediate is $US87.69 a barrel. The current average price of diesel in Australia is $1.95 a litre at the pump.

The Israel-Hamas war, which is having a devastating human toll, has those in the agricultural sector on high alert.

Western Australian farmer and Grain Producers Australia chairman Barry Large said farmers were already growing some of the most expensive crops in terms of inputs.

The 2023 growing season was marked by a shortage of urea. This came after extraordinary high prices for the input of more than $1000 a tonne in 2022.

“This will be one of the dearest crops we have grown due to high diesel prices and inputs,” he said.

Mr Large said the further unsettling in the Middle East was an indication to Australia that fertiliser supplies needed to be more self-sufficient domestically.

In addition to high inputs, he said farmers in Western Australia, Queensland and northern NSW were lacking rainfall too.

“Diesel prices went up a couple of days ago, and I (would) hate to see the outcome when that hits at the bowser,” he said.

Granular fertiliser. Picture: iStock

Fertilizer Australia chief executive Stephen Annells said all eyes were on Israel, but it was still early days in determining the impact on fertiliser supplies.

He said there was likely to be some flow-on impacts on energy values with a consequent price adjustment tipped.

“We also saw some adjustment of grain prices early this week,” he said.

Mr Annells said it was too early to determine what the current conflict would do regarding fertiliser availability and price.

He said there was still 7.2 million tonnes of fertiliser brought into Australia for the 2022-23 financial year despite the publicised urea shortage earlier this year.