There has been a large increase in the value of fertiliser imported to WA compared with other states.
THERE have been concerns throughout this season about the lack of available urea, which we believe is the case in specific geographies.
Urea is like a power-packed food for crops, especially grains. Just as humans need balanced nutrition to grow and stay healthy, plants need certain nutrients to flourish.
Nitrogen is one of the most important nutrients for plants. Urea is a type of fertiliser rich in this vital ingredient, helping plants get the nutrition they need to produce bountiful and healthy grains.
Imagine a field without enough nutrition. The plants might be weak, produce fewer grains, and might not even taste as good. This is where urea comes in.
When farmers spread urea on their fields, it’s like giving their crops a hearty meal. This ensures that we get more food from each field and the grains are of good quality.
This year there have been rumours of urea shortages around the country. In reality, the fertiliser trade has done a fantastic job. In 2023, record volumes of urea have been imported into Australia.
Let’s look at the numbers.
In the first eight months of 2023, more than 2.5 million tonnes of urea were imported. Is this a lot or a little?
Let’s put it into perspective. Compared to 2021, imports so far this year are up 316,000t, with that figure hitting 369,000t above 2022 levels so far.
These were the two previous record years for imports of urea, and we have smashed it.
I was expecting we would see a huge crash when the August numbers came in, but that hasn’t been the case.
I was discussing Australian imports with an industry contact, who got onto the topic of scarcity and that it is a sales technique as old as the hills.
This technique intends to create a sense of urgency among potential customers, nudging them to make a purchase more quickly than they might otherwise. The perceived rarity or imminent unavailability of the item can increase its perceived value and desirability.
I am not saying this is the case currently, but it does seem we hear the old ‘get in quick before we run out’ advice every year.
We can only outline what the data says and, on a national level, imports have been huge.
So where has it gone?
As always, as analysts we like to delve further into topics to see if we can get a clearer picture of the market.
There are some caveats with this data, in that the data is based on the value of fertiliser imports, not the volume, and not refined to fertiliser type. It is there to give a trend. The value of imports has been strong so far this year.
The chart above shows the average annual composition of fertiliser in each state, along with the 2023 composition. We can see there has been a large increase in the value of fertiliser imported to Western Australia compared with other states.
And in terms of annual imports, there has been a sharp increase in imports into WA relative to the other states.
This follows anecdotal information that WA has struggled less with access to fertilisers than the other states.
• Andrew Whitelaw is co-founder and director of Episode 3 (EP3)