Fuel, fertiliser, labour, energy: farm input woes spelt out in cost of living inquiry

Jason Strong appeared at the Brisbane public hearing of the Select Committee on Cost of Living this month, where input costs for farmers were a hot topic in unpacking the reasons behind the big rises in fresh food prices on supermarket shelves.

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The inquiry has collected information from numerous agriculture industry leaders that skyrocketing fuel, fertiliser, labour and energy costs - and the extreme shortages of those inputs - were biting hard into farm costs of production.

Mr Strong said on the red meat side, the variability in input costs over the past few years had largely been masked by increased returns for livestock.

The cattle market continuously broke record highs as restockers scrambled to rebuild herds on the back of good seasonal conditions.

However, this year livestock prices have come back and as that continues the supply chain squeeze would become far more visible, Mr Strong said.

"Not having security over supply and costs of inputs is the real concern," Mr Strong said.

He explained red meat supply chains had become more sophisticated in recent times, which had delivered a clearer line of sight to farmers regarding returns on investment.

"So where we invest in, say, fertiliser, we can see there will be a return," he said.

"We can handle higher prices if we know we can connect it to a supply chain that allows us to create and capture value."

That same sophistication of supply chains provides protection for money spent during seasonally tough years, he said.

"I can afford to feed my cattle because I know there is a good market they can go to which will reward that investment - there is a customer at the end who will pay for it," he said.

"That gives people more confidence to invest in times of varied weather and what we don't want to see is that confidence eroded because input costs become so volatile."

Likewise, it was not just the escalating costs of fertiliser but the fact Australian producers were now looking down the barrel of not being able to source it at all at a critically important time that was the big concern, Queensland Farmers' Federation chief executive officer Jo Sheppard told the hearing.

"Australia, and Queensland in particular, is coming off the back of three bumper production years in ag, so we need fertilser to replenish soils," she said.

"It is very bad timing to have a fertilser shortage."

Asked about the big drivers of skyrocketing fertiliser prices, Ms Sheppard said it was the combination of a number of factors, from supply chain disruptions through the pandemic and the war in Ukraine to high global energy costs.

"We are hearing from other parts of the world - Europe in particular - that it is no longer cost effective for them to produce fertiliser due to the cost of energy," Ms Sheppard said.

"In Australia, we are reliant on importing fertiliser.

"It is fair to say if we had been more focused in the past on developing our own capacity to supply fertiliser, we'd be in a better situation now.

"While we will always be reliant to some extent on the global market, there is enormous opportunity for us to innovate domestically around fertiliser."