Cost increases will be felt right across Australia’s farm sector in 2022, driven by expected further hikes in energy and fertiliser prices, according to a Rabobank report.

The report titled ‘The Russia-Ukraine War’s Impact on Food and Agri: What Oceania’s Food & Agri Chain has to Plan For’, details how disruptions to trade flows from the two major agricultural powerhouses of Russia and Ukraine have had a major direct impact on global grains markets and will continue to keep global grain and food prices elevated throughout 2022 “and likely beyond”.

Australian grain farmers are benefiting from increased prices, but not as much as in many other parts of the world, as the recent record Australian crop is stretching export logistics to their limits.

Global fertiliser prices reached all-time highs in early April, and not just due to the elevated grain prices, but also because Russia and Belarus are major exporters of various fertiliser types.

The report also states there is not likely to be any relief ‘at the bowser’ any time soon, with energy prices faced with a further big price rise due to the European Union’s plan to ban Russian oil imports by late 2022.

“As Australia is a net importer of crude oil, the global energy price volatility will be felt by consumers here,” Mr Vogel said.

“Crude oil and diesel price increases due to the war will add to costs in farming and the supply chain.

“While crude oil prices above USD $100 dollars a barrel already feel expensive, a further price increase of more than 50 per cent is possible as a result of those planned EU sanctions, if they come to pass.”

 The report also highlighted the ongoing issues with the COVID-stressed global freight logistics system under pressure from the war.

 “Shipping costs will continue to feel the impact of rising energy prices. And especially container freight, not only because of the war, but also due to continued COVID-related disruptions like lockdowns, especially in China, and continued labour shortages.”

“As the war started in February 2022, Ukraine had already shipped at least half of the season’s volumes. Consequently, the world has not yet felt the full impact of the heavy absence of Ukraine’s supplies. However, this is about to change from July onward when Ukraine harvests its next crop.”

“Australia is therefore unable to ship much more this season, and rather is seeing local stocks rising,” Mr Vogel said.

“Still, for the upcoming season, and potentially seasons beyond, Australian grain and canola farmers will be benefiting from strong prices.”

Meanwhile, Australia’s livestock and dairy sectors are also indirectly impacted by the Russia-Ukraine war through higher input costs from feed, fertiliser and energy.

 “Neither Russia nor Ukraine are major importers or exporters of beef, dairy, pork or poultry though, so global trade flows of animal protein have not been disrupted anywhere close to the magnitude of grain trade disruptions,” he said.