The true cost of planting a crop this season

A Wimmera grain grower reveals the steep price he is paying for fuel, fertiliser and chemicals to sow this year’s winter crop.

Grain grower Ryan Milgate in a crop on his farm near Minyip in Victoria's Wimmera region. He says input costs for fuel, fertiliser, and chemicals have almost doubled since this time last year. Picture: James Wagstaff

Victorian grain producer Ryan Milgate is in the final week of sowing his crop at Minyip for the season, jumping in and out of the tractor in between rain showers in the Wimmera.

While the weather has been ideal for winter crop sowing and buoyant grain prices have injected a sense of optimism into the industry, Mr Milgate said that joy faded once growers started to tally up the increased input costs this season.

Global market conditions including war in Ukraine, rising inflation and lingering Covid-related supply chain issues have increased the cost of crucial inputs, such as fertiliser, fuel and machine parts.

Mr Milgate estimated he was spending $550 a hectare in fertiliser, chemical and fuel costs, compared to $300 a hectare last year.

“All of a sudden, the numbers are getting bigger and bigger,” Mr Milgate said.

“The key ones are fertiliser … some chemicals have gone up about 40-50 per cent … the chemical bill all told has risen a lot.

“To add to that because of supply chain issues, a lot of producers are getting the stuff they need a lot earlier than they would need it. We’ve pretty much got all our chemical on farm now. Put that across with the 20 to 30 per cent increase in chemical cost … it’s a big bill sitting there at the beginning of the year.”

Fertiliser costs, while they have softened in recent weeks, remain significantly higher than the same time last year.

Data provided by Thomas Elders Markets calculates the price of purchasing urea in the Middle East, plus freight to Australia and subsequent discharging, to give an indicator of the replacement cost of urea.

May prices are sitting at about $1108/tonne, compared to the $533/tonne at the same time last year.

Farmer Ryan Milgate in a crop on his farm near Minyip in Victoria's Wimmera region. October 2020. Picture: James Wagstaff

Fuel costs have also increased dramatically, with the RACV fuel tracker website putting the average price of fuel in Victoria at 209.7c/litre earlier this week.

While the Federal Government’s fuel excise cut has shaved off about 20c/litre for petrol and diesel, Mr Milgate said prices were still about double what he was paying last year.

“Last year fuel was very cheap, once you take the rebate out it was about 70c/litre … now fuel is around $2/litre … it all adds up,” Mr Milgate said.

Despite the increased costs, Mr Milgate said there was still optimism across the industry, with elevated grain prices a boon for growers who harvest a crop.

However, producers were evaluating their expenditure more than usual, Mr Milgate said.

“We don’t just throw money around willy nilly. But a lot of people are saying, well, you know, say for argument’s sake, we’re looking at nitrogen inputs, and we’ll do a lot more soil testing and we’ll be a lot more targeted with our nitrogen,” Mr Milgate said.

“People will still put a crop in, but decisions will be made differently.

“Until we’ve got this harvest in the bin, you can’t really capitalise on the grain prices for this year. The crop we’re allocating these inputs to, we won’t realise that until December at the earliest.

“Who’d have thought you’d be looking at $400-plus wheat, $1500 urea … no one would have dreamt of that.”