Miller Magazine Issue: 147 March 2022

116 Country Profile MILLER / march 2022 On a monthly average, we have imported approximately 14% of our urea from China. However, we have had months where the volume has been as high as 83% and as low as 1%. Austra- lia has a much bigger reliance on China for our supply of MAP/ DAP. On a monthly average, we import 65% of our MAP from China. On a number of periods, Chinese volume has repre- sented >70% for extended periods. The likelihood of substantially lower fertiliser prices before the start of the Australian seeding window is highly unlike- ly. Whilst fertiliser prices have considerably fallen overseas during the first two months of 2022, it is likely that Australian prices will lag overseas markets. In a similar fashion to fertiliser, the major chemicals used by Australian grain growers are produced in highly energy-inten- sive processes. The commonly used herbicide Glyphosate is one of these chemicals. The price of this chemical has a strong relationship with the price of energy. Chart 5 displays the cost of US natural gas and glyphosate as an index rebased to August 2006. At present, glyphosate is yet to achieve the high prices of 2008. There are currently concerns that a force majeure event is being enacted by Bay- er, one of the world's largest glyphosate producers, is being enacted due to supplier faults. The information is not conclu- sive but could reduce volumes of glyphosate available on the global market over the next two to three months. The final input that grain growers face which has increased but is harder to quantify, is labour. Australian farmers regularly use backpacker labour; these are young people who come to the country on holiday but are able to work to fund their trav- els. These backpackers are in short supply. Covid has severely constrained movements of people; Aus- tralians haven't been able to get to WA, never mind arrive from the rest of the world. Travel restrictions have caused a sharp drop in the number of applications for backpacker visas. Chart 6 shows the granted backpacker visas, based on which year the visa has been applied for. This is important later on. The average number of visas was around 205,000 per year during the last decade. In the 2020 financial year, it was 31200, and up until December 2021, it was 17500. A huge fall, but not surprising considering no one could get through our border. The next thing that I think is important is the lack of second-year visas applications. In a typical year, just under 20% of applicants would be on a second-year visa. The second-year visa holders are not going to be there, as there were less than 2000 first year visas last year. In addition to attracting new backpackers, the gap in second-year backpackers will have to be filled. The reliance will be on new applicants and third-year vias. Only 8% of the average number of backpacker visas have been granted roughly halfway through the year. The shortage is not going away anytime soon. So, all in all, Australia is on track to produce another large crop, but farmers in the country face a cost-price squeeze due to an in- creased cost of production. The invasion of Ukraine by Russia could further complicate and inflate the cost of many of these inputs. Chart 4 Chart 5 Chart 6