Senate Rural and Regional Affairs and Transport Legislation Committee, , 59:54 to 1:14:03
The department outlines the impact of Middle East conflict on urea and fuel supplies. Details are provided on the Fuel and Fertilizer Security Facility, diversification of imports from Africa and Southeast Asia, and the establishment of a fertilizer dashboard.
Topics: Food security, Agricultural productivity, Trade policy
Speakers: Matt Lowe, Senator Glenn Sterle, Sarah Burr, Miss Victoria Anderson, Unknown Speaker, Senator Ross Cadell, Speaker 9
>> And I think Senator Colbeck might kick this one off.
>> Yeah, I've got some questions, too. So I might >> I'll come then I'll come to you, Richard.
>> You might rush in.
>> Yeah, I won't be long. I'll probably be about 10 minutes, I suppose. I'm at your disposal, Miss Anderson. You
>> just waiting on another deputy and a couple of others.
>> They probably got a shock that we got through corporate.
>> I think they were probably relaxing a little bit too much at the moment.
>> All right. I think by the sounds of it, we'll we'll um have some time with outcome one.
>> Yeah.
It's underra according [clears throat] to Karen. >> H Andra. >> Okay.
>> I think the folders have stopped coming through the door. So, I might be safe to kick off on outcome one. Miss Anderson, I'll put my questions to you >> and please direct me to others if should it need to. But two things that very concern me particularly not only in this portfolio but in this portfolio is the security of fuel and fertilizer and of course that extends out to our transport industry in general. So I'll ask can the department outline how the conflict in the Middle East affected Australia's fertilizer supply chains and why securing fertilizer was so important for both Australian agricultural production and food security.
>> thank you. Um thank you chair. Yes. Um as you as I mentioned in my opening statement um I think watching the situation in the Middle East and its impact on inputs for agriculture was um a a huge priority for us over the last little while. But I'll ask um Mr. Low to go into some of the things that the government's done in relation to fertilizer supply.
>> Thank you.
>> Thank thank you chair. Um and so Matthew Low um deputy secretary agriculture fisheries and forestry policy group department of agriculture fisheries and forestry. Um and and a as as your question rightly raises, fertilizer and fuel were both really important issues for the agriculture sector >> um arising from the Middle East conflict. Um if I can turn to fertilizer first Senator um the straight of Hormuz um or or Australia effectively prior to um the conflict imported about 60% of its ura from the Middle East and that traveled via the straight of Hormos. So as soon as the conflict um um arose that that that effect that supply chain was effectively interrupted and that source was effectively unavailable. Um you be aware um chair that the the timing of that um of that conflict was leading into the winter planting season. So um ura which is the dominant form of fertilizer that's required um for Australian production systems because we're effectively nitrogen poor in our in our Australian soils um meant that moving into where we need that ura or the timing that we need that ura was effectively when we were short as well
>> was what sorry
>> was when we were short of ura as well due to that conflict. There's a couple of other dynamics that were occurring in the global market as a result of that. So um one of the dynamics was obviously a range of other countries also need ura as well. So India for example were putting out significant um tenders for large amounts of ura um which meant there was significant global competition for ura supplies as well. And in in addition to that, some other um suppliers of ura or countries that supply ura or net exports exporters of ura also um effectively um put export controls on ura as well. Um I think China was one of those. So you can see that the whole kind of market effectively contracted um at a time when Australia really needed ura. a couple of things that um the Australian government did in response to that situation. The first was to look at alternative markets for the supply of ura to where we would normally obtain them. So obviously I said in um Middle East was a particular dependency for Australia. Um what we did was worked closely with DEFAT and with the department of industry science and resources to identify alternative markets. So those markets were Southeast Asia, so near neighbors um but also Africa as well um and countries in Africa. And what's I think really encouraging and cause for optimism is as a result of um as a result of the conflict the diversification of our imports of ura has significantly expanded um as a consequence of um the work that government did with industry to identify some of those alternative suppliers and markets. In addition to that, Senator, the government established the fuel and fertilizer um security facility. >> Uh that um facility um effectively was um a facility to support um industry to obtain um ura supplies that were additional to what they would otherwise able to obtain on commercial terms in the international market. I talked about some of those dynamics that were existing in the international market. Um in addition to that that what what happened was that the rear price globally um increased from around $500 um US a ton to around $900 a ton. So a significant increase. um and and then there was so there was a greater risk in in terms of obtaining those shipments uh on the international market um um for commercial entities. So so [snorts] that facility was um established and um a number of companies um were effectively signed up under that facility. Who were >> they? Um so going on my memory so Inst Pivot um and CSBP >> and Summit was the third one.
>> Summit. >> So we've got the whole country covered there, haven't we?
>> We do. So um one of the one of the key things that were we were thinking about in terms of um signing up those companies was and that was obviously done with Export Finance Australia. So those that facility was managed by Export Finance Australia, but was coverage. So could they um supply domestically and have coverage across Australia? That was the first one. >> Um would they be able to get the URA to where it was needed. Um the second one was um the scale of their kind of international reach and supply chains. So would they be able to secure those shipments and would they be able to take ownership of those shipments um on international borders? Um so those were some of the I guess key criteria that we were looking at. Obviously do they have a strong biocurity track record,
>> right?
>> Um fertilizer being >> obviously something that we need to ensure meets our strict biocurity requirements when it comes on shore as well.
>> So with those requirements, there was obviously a few companies that didn't
meet the grade. Um what I would say Senator is that it was something that we wanted to ensure we carefully considered >> um we examined companies track records and of course kind of if there were sort of additional questions that we might have had >> um for particular companies um we were going to make sure we followed if you like kind of that that bouncing ball to the very end to make sure we were
satisfied. Yeah, that is really G. If we could spread that out to other departments, that would be a plus >> anyway. And I'm a firm believer in consulting with industry, too. So, it's great to see the input with industry cuz the the people that know all the shortcuts and they also know what the problems are and how to solve them. So,
>> exactly. Exactly. That's great. >> And to your point, chair, [clears throat] >> um we also established the fertilizer supply working group. the fertilizer supply working group as you as you mentioned was established and it had industry representation on it. So it had fertilizer Australia on it and it had the national farmers federation on it >> and it had a range of departments that were involved in sourcing um fertilizer and supporting fertilizer inputs.
>> So industry industry was beside government all the way.
>> Absolutely.
>> Fantastic.
>> Absolutely. And that was really important
>> recipe for success.
>> Yeah. And and I guess getting to your point, the um the establishment of the facility um is obviously an unusual intervention for government, right? Just as it is for fuel. >> It was done so in the national interest. And the national interest we defined as ensuring that agricultural production could continue at a critical time for when um it was needed that fertilizer was needed to support the planting
>> Tremendous. Mr. below. So, while we're at it, and I'm not sure if this is for you or for a bears, but we'll have a go. So, can you tell us how the uh how has the government's action to secure fertilizer through the facility contributed to this year's crop outlook? Is that you guys or AB?
>> Well, I think Abezz can come to the table to help, but um I might just pass to my colleague Nur in just to talk about how much fertilizer was secured and how much is on shore now. >> Tremendous. And we did um we did as part of the the process when we started out we had a very a possity of information in relation to fertilizer imports and fertilizer use in Australia. Um I'm pleased to [clears throat] say chair that um as a consequence of the work that we did with industry and across government we now have a fertilizer dashboard that we publish regularly which goes through all the different types of fertilizer how much is onshore and how much we think is going to need for the year as well.
>> That is yeah
>> and one of the big issues I think going into that winter cropping period chair was industry confidence. So farmers were looking at the situation. They're going, "Well, will we have enough fuel to to be able to kind of run our machinery to plant our crops? Will we have enough fertilizer um to to support planting and will we have enough fertilizer to support top dressing and those sorts of things as well?" And that therefore was they were making decisions about well how much do we plant um or not as well. And that goes to profitability. So the facility, the work in terms of additional suppliers, the information um in the dashboard all supported confidence for the sector as well. >> Tremendous content.
>> Yeah. Cuz I know the panic when it first started, you know, oh my goodness me and I was watching from afar. When I say afar, I meant the other side of Australia, the more important side of Australia [laughter] that carries the rest of you lot. But but you know, but also with with agriculture lens on and transport lens on, it was a real in the
chair. We might just remind you of that.
>> I'm feeling pretty ballsy today, so >> Oh, I don't mean I mean lucky I withdraw that. Very brave I am today.
>> So we might go to some numbers first.
>> Yeah, let's do that. Tremendous.
>> Yeah,
>> sure. Hi, Senator. Um Sarah Bur, assistant secretary, supply chains and strategy branch. Um so in terms of um the volume of uh agricultural grade ura brought in um supported through the fuel and fertilizer security facility, that was 333,000 tons. Um and um in terms of the total uh uh bulk ura imported um this year so that's from 1 November 2025 um to uh the 22nd of October um that's 3.36 million tons. So um I'll let my Abears colleagues speak to um uh what went into their um forecast and and estimation for the annual requirement. Um but uh the latest forecast um that was supplied I believe on the 1st of um September was that for the season Australia would require 3.25 million tons. So if we've brought in 3.36 million tons that's obviously more um than what the estimated requirement was. So we've been able to um achieve uh we believe 103% of the annual requirement um of ura imported this year um with a um a proportion of that um supported through the facility.
>> Well, you know, you don't get this too often. Everyone's lines up to give you a whack. But not you personally. I meant the department. But but congratulations. The foresight that was showed there to embrace it. Um industry straight away and between the government, the department and and industry is great news. Fant. Well, you set the scene now. You see,
>> I think it also Minister Collins has had fantastic leadership and uh and she did a fantastic job to uh to use our fantastic relationships to secure that. So, good on you, Jules. That's
>> right. I couldn't have put it better myself. There you I just I just said government, but well done. Um, look, just a couple more. So, look, we know because of the higher inputs, because of the the drama going on over there, but can you tell us why the government's deferred the move to full export cost recovery and what that means in practical terms for producers and exporters? Now, I'm putting that to who?