THE IMPACTS of COVID-19 on global markets and supply chains have been heavily reported on over the past three months.
A slowdown in global trade has raised concerns regarding product availability in most industries.
Locally, unanticipated summer rain and a favourable start to autumn has prompted on-farm discussions about the supply access to agriculture chemicals, fertilisers and rural supplies.
Favourable rain across key agriculture regions throughout summer improved the outlook for this year, while also increasing the presence of weeds. With this in mind, the availability of herbicides, such as glyphosate and trifluralin, have been of key concern.
During summer, most agricultural chemicals were in relatively low supply, due to subdued demand caused by ongoing drought. When unexpected summer rain fell, many suppliers were caught off-guard with little stock on shelves.
Suppliers increased order from key exporting regions, however, the outbreak of COVID-19 disrupted the delivery, in an already stressed market.
Interruptions to supply chain
Large structural changes were already taking place in the agricultural chemical supply chain, particularly in China (where a large percentage of ‘round-up’ products are sourced from).
Government restrictions had recently intensified, aimed at reducing the emissions associated with the production of these chemicals. This saw Chinese exporters cutting production significantly over the past two years. As a result, Australian suppliers reported that it was slightly more challenging to source product from this region.
The outbreak of COVID-19 in China and subsequent impact on supply chains, come at a bad time for agricultural chemicals.
Quarantine measures reduced the production and export capacity at the same time as demand spiked in Australia.
Restrictions implemented to curb the spread of COVID-19 slowed handling at Chinese (and other) ports, and caused some congestion, and a temporary backlog in shipment.
New shipments expected soon
There is a minor gap in the market for these products, however most sellers are confident any supply shortfalls won’t endure, as new shipments are expected shortly.
In comparison, fertiliser suppliers benefit from having a variety of locations to source product from. Although the Australian fertiliser market is heavily reliant on imports, overall availability does not depend on one major market.
Since the COVID-19 outbreak, there have been no significant movements in international prices. However, as the AUD weakened, the cost of importing fertilisers has grown. Therefore, the exchange rate is a key area to monitor in the coming months, particularly for urea imports.
Phosphorus and nitrogen imports
The majority of this season’s phosphorus imports have already arrived in Australia.
Distribution networks across the country continue to deliver product as application commences together with the planting of winter crops and pastures.
There is, however, some risk to the availability of nitrogen, as Australia enters the main importation period (April, May, June), ahead of peak winter and spring application. There are sufficient stocks globally to satisfy demand, however, ongoing disruptions to ports and shipping are cause for some concern.
At the time of writing, no major delays are expected, although it is an area to closely monitor. Overall, systemic disruption to supply chains have not been reported, and Australia’s ability to source product from different markets makes a significant or prolonged shortfall in fertiliser supply unlikely.
Business normalising
On a positive note, business is starting to return to normal in China, as factories have re-opened and production lines are picking-up momentum. This includes the manufacturing of chemicals, fertilisers and rural supplies.
Workers have returned to ports and this has seen sea cargo routes reinstated and containers started to be re-distributed globally. This is an encouraging development towards normalised supply chain conditions.
The ongoing spread of COVID-19 has caused disruptions to global supply chains with flow-on logistical challenges, however, key farm inputs continue to be shipped, along with local supplies secured before the outbreak.
Communicate with suppliers and agronomists
Locally, the overwhelming advice from those in the industry, for farmers, is not to panic-buy excess volumes of product, but to be proactively communicating requirements with suppliers and agronomists.
Active relationship management will be the best source of information on local stock availability and delivery dates.
Contingency planning will also be a practical way of dealing with any unforeseen disruptions to operating environments.