Iran's blockage of the Strait of Hormuz has halted around 20 percent of the world's oil, but the flow-on effects are hitting Australian farmers in another way entirely: through urea, the nitrogen fertiliser used in winter pasture growth and grain production.
What happened: The closure has disrupted global urea supply at a time when Australian farmers are approaching the colder months and preparing to fertilise paddocks. Australia imports 64 percent of its urea from the Persian Gulf, leaving the industry heavily exposed to the disruption.
The costs: "The price has gone up from $800 to $1,250 a tonne," the Gippsland Monitor’s Jacob Wallace said during a recent podcast with the National Account.
Local impact: One dairy farmer Jacob spoke to, near Leongatha, normally spends $80,000 a year on urea and has decided to skip ordering for winter entirely rather than face a bill that could double.
What they're saying: "When you're farming, you're essentially taking nutrients out of the ground no matter what you're doing, and so you have to invest in putting nutrients back," Wallace said.
Beef farmer Fergus O'Connor, of Beres Creek, told Wallace he had already moved away from urea following the Ukraine war price spike, switching to a leaf foliage spray that cut his per-acre cost from $3,500 to $400 for 25 acres.
Making it at home: A major domestic urea facility, the Perdaman Urea Project near Karratha in Western Australia, is under development. University of Sydney researchers are also exploring green hydrogen as a replacement for natural gas in production.
"If we can find a way to use renewable energy to create urea instead of gas and oil, that would be more sustainable and drive down the cost as well," Wallace said.
Watch the full interview below:
Thumbnail: AAP