Australian farmers have done very well out of a food supply crunch particularly in the winter cropping sector, but input costs - particularly fertiliser- have reduced the benefits for farmers' bottom line.
Rural Bank released its agriculture outlook on Friday and analyst Sean Hickey told Flow that one key rising input cost, fertiliser, is expected to stabilise in the first half of 2023:
"We are seeing the high energy prices throughout Europe really push the gas-based fertiliser prices higher and maintaining that volatility and that's certainly going to be the case over the next six months.
"Prices should ease a little bit from the record prices we saw this year, particularly for the more phosphate-based fertilisers, but for those nitrogen-based fertilisers that are produced via natural gas, we think that they will remain high if a little lower than we saw at times this year.
"Having said that, the high commodity prices particularly from the cropping sector will help growers hopefully maintain their margins to a degree and to be able to get a full seed rather than having to restrict their crop based on how much fertiliser they can purchase."
Hear the full interview covering a range of commodity outlooks with Rural Bank's Sean Hickey on the Flow podcast player below: