Domestic price of fertiliser

IBISWorld expects the domestic price of fertiliser to fall by 6.9% during 2024-25, to reach 64.8 index points. Key fertiliser inputs include phosphate rock, triple superphosphate (TSP), diammonium phosphate (DAP), potassium chloride (potash), urea and ammonia. As Australia has weaker buying power in the global fertiliser market because of limited consumption of fertiliser, changes in global prices of key inputs and the global fertiliser market influence the domestic price of fertiliser. While global prices of major fertiliser inputs like phosphate rock, urea and potash remain volatile, prices have been easing and recovering supply and demand conditions in the global fertiliser market are expected to reduce the domestic price of fertiliser in 2024-25.

Domestic fertiliser prices are heavily influenced by price movements for inputs such as nitrogen, sulphate and phosphate. Russia is among the largest global exporters of fertiliser and fertiliser inputs, including natural gas, ammonium nitrate, urea, ammonia and NPKs. In March 2022, many countries globally, including Australia, announced restrictions on imports from Russia, limiting the global supply of fertiliser and many key inputs used in producing fertiliser. As a result, fertiliser prices skyrocketed in 2021-22 and only edged down slightly in 2022-23.

Domestic fertiliser prices are also a function of demand for fertiliser from farming industries locally and abroad. Annual rainfall levels influence demand for fertiliser prices at the farm level. Poor rainfall makes it difficult to grow crops and pastures, increasing the need for fertiliser. However, prolonged drought can also constrain fertiliser purchases, with ongoing dry conditions discouraging farmers from investing in often-expensive fertilisers.

The domestic price of fertiliser has fluctuated over the past five years. The price of key fertiliser inputs, such as nitrogen and phosphate, fell due to weaker global demand during the COVID-19 pandemic, resulting in a sharp decline in the domestic price of fertiliser over the two years through 2020-21. Demand for nitrogen and phosphate recovered in the following two years, placing upward pressure on the price of fertiliser. However, the fertiliser and fertiliser input supply shortage in the wake of the Russia-Ukraine conflict had an overwhelming impact on the upward trajectory of domestic fertiliser prices over the past two years since 2021-22. While the domestic price of fertiliser remains relatively higher than the historical average, the domestic price of fertiliser has softened in more recent years, with a peak in 2021-22. Overall, IBISWorld expects the domestic price of fertiliser to rise at a compound annual rate of 7.1% over the five years through 2024-25.