Farmers stockpile inputs to avoid future shocks

Farmers are increasing on-farm storage and stockpiling more and more fuel, fertiliser and spare parts to avoid future supply chain issues and market fluctuations.

Producers are increasingly building million-dollar stockpiles of chemicals, fuel, fertiliser, hay, grains and spare parts on-farm to avoid broken supply chains and market shocks, according to VFF grains council vice-president Ryan Milgate.

Mr Milgate said increased purchasing had become embedded into farm risk-management plans by farmers who “have gone pretty close to the wind” in recent years with reduced input supplies and increased costs threatening harvests and seeding.

The news follows a significant recent urea shortage that triggered increased international shipments, fears of crop losses and retailers restricting sales up the Eastern seaboard.

“The average smaller guys would have half a million to a million worth of inputs on farms now, and then the bigger guys would have many millions worth,” he said.

Victorian Farmers Federation grains council vice-president Ryan Milgate. Picture: James Wagstaff

who have been caught and have the cash flow do not want to be in the situation again. The game is changing a lot.

“We are becoming commodity managers now. I have all my chemicals to get me through seeding next year already, we are now six months to a year in front with everything.”

According to GrainGrowers, about 90 per cent of producers now have some form of grain storage on-farm, with average storage capacity per farm increasing from 1,600 tonnes in 2013 to 2,200 tonnes in 2021.

Few farm inputs were unaffected in the Covid-era and as a consequence of Russia’s invasion of Ukraine, from energy to diesel and other fuels, fertiliser and chemicals, to fodder and seed, haulage, spare parts and labour costs, while rising interest rates and mortgage repayments added to the burden.

Mr Milgate said some farmers were holding as many chemicals as most regional suppliers and it was standard for farmers to now have up to 50,000 litres of fuel in tanks whereas more than 10,000 litres was rare five years ago.

In one instance, he said a local licensed dealer, with depleted retail stocks, recently called a fellow farmer seeking to purchase some of his spare parts.

According to Australian Bureau of Agricultural and Resource Economics and Sciences data, total farm costs were predicted to rise from the $62.9 billion recorded in 2021-22, to $66.3 billion in 2022 -23.

Picture: Instagram

Meanwhile, Commonwealth Bank general manager of agriculture Natasha Greenwood said there has been a significant increase in farmers seeking finance to build on-farm storage infrastructure after favourable conditions produced strong yields in recent seasons.

She said storage allowed farmers to navigate fluctuating commodity prices and clear grain when it best suits the business while also planning against future weather headwinds and storing a supply of grain for animal feed.

Other infrastructure farmers are increasingly investing in includes feedpads, water storage and energy infrastructure, such as generators and automatic sprinkler systems. Following extreme weather events in recent years, Ms Greenwood said graziers are also building facilities on higher ground to store machinery and to relocate livestock in times of flood.