Fuel demand and increased prices put a strain on farmers

According to Grain Producers Australia's national chairperson and Wimmera farmer Andrew Weidemann, diesel prices are double what they were last year and issued a warning over a potential diesel shortage in the coming months.

"There have been some fuel suppliers who have called me over the last month expressing their concerns," Mr Weidemann said.

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"We've got concerns around the fact that Australia's only got two refineries.

"We've been calling for more fuel storage in Australia to secure our supply for agriculture in particular because, at this stage, we've up to three days of use should there be extreme circumstances."

In Australia there should be 90 days of fuel reserve.

"We hold about 30 days now," Mr Weidemann said.

"The government has recognised that.

"There have been some schemes where they look at building large central tanks to try and increase it, but we need to continue to increase fuel storage to ensure we have security of supply."

Mr Weidemann said demand and the price of oil were contributing factors in fuel scarcity.

"(Crude oil) is about $85 a barrel now instead of about $40 a barrel," he said.

"We've got demand and we've got to pick up that capacity and supply and, of course, the raw material is going up in price."

Another huge factor is shipping freights which is "affecting everything," Mr Weidemann said.

"Everything that's freighted to Australia or being sent out of Australia at the moment, is having a impact on fuel," he said.

"The demand will continue to go up as airlines start flying again and as shipping starts to build up again."

Mr Weidemann advised farmers to continue talking to their fuel supplier.

"We don't want to see a run on the market and driving up extra costs," he said.

"The reality is that farmers are going to need fuel to get this year's harvest off and running."

Last week, Thomas Elder Markets analyst Andrew Whitelaw said the October 2021 harvest average price of 149cents per litre for diesel was the second-most expensive since 2004.

It's a sizable jump up from the October 2020 average of 102c/l, which was the second-cheapest since 2004.

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GrainGrowers chairman Brett Hosking said farmers were conscious and wary of the rising price.

However, Mr Hosking said farmers were well aware it was an essential input and something they could not do without during what was shaping up to be a promising harvest.

"It is coming at a time when we are seeing price rises and significant price rises in a lot of farm inputs including fertiliser, chemicals, diesel, parts and machinery," he said.

"Growers are making decisions in many cases about which products they pre-purchase and which they are prepared to wear a little bit of a price increase on."

Mr Hosking said strategies for managing the price increase were mixed and some growers with the capacity to store diesel had gone out and purchased it.

Others were hedging their bets with a purchase price in mind and would go out and buy once the price hit that figure.

Diesel prices are "the dearest they have been in a long, long time", according to distributors.

Mogas Regional services farmers across Victoria and business manager Daryl Anders agreed with Mr Hosking's assessment.

"A lot filled up everything thinking it (the price) is going to go up more and a lot are sitting, waiting to see what's happening," he said.

Mr Anders said where some people would buy 20,000L of diesel while others were only purchasing 5000-6000L.

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