The conflict in Ukraine is expected to see costs for the Australian farm sector continue to rise and grocery prices to remain high, according to agricultural analysts.
A report from agribusiness banking specialist Rabobank found trade disruptions for Russia and Ukraine had already had a major impact on the global grains market, with grain and food prices to stay elevated through 2022 and beyond.
Related: Australia grain prices rise as Russian invasion disrupts global supplies
While “skyrocketing” fuel and fertiliser prices will continue to cut into farmer’s profits, in the grain, livestock, dairy, fresh produce, tree nuts and sugar sectors, the report said.
There is no relief expected at the bowser any time soon according to the report, with energy prices facing a further big price “upside” due to the EU’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,” said report author Stefan Vogel.
“Crude oil and diesel price increases due to the war will add to costs in farming and the supply chain,” he said.
Crude oil could see further price increases of more than fifty per cent if the planned EU sanctions happen according to Vogel.
Ukraine’s production and exports are set to be heavily reduced for 2022 and next year but the full impact of the war is yet to be realised, with Ukraine harvesting its next crop from July.
Russia and Ukraine normally account for a combined share of 20 to 30 per cent of world exports of several key commodities.
The report found that global fertiliser prices reached an all time high in early April due to the elevated grain prices, and because Russia and Belarus are major exporters of various fertiliser types.
“Fertiliser prices elevate with grain prices and the current high price period is not an exception,” Vogel said.
He continued that Australia doesn’t typically import its fertiliser from the Black Sea region but a contracted fertiliser supply globally will make it tougher for Australian farmers.
The report said that Australia’s livestock and dairy sectors are also indirectly impacted by the Russia-Ukraine war through higher input costs from feed, fertiliser and energy.
While Australia’s fresh produce and tree nut sectors will feel indirect cost impacts from fertiliser and energy.
“Ukraine and neighbouring Moldova are amongst the top 10 global walnut exporters and the war may somewhat impact this trade flow. The knock-on effect to Australian almond producers is likely rather small,” Vogel said.
with news from AAP