Interview with Meecham Philpott, ABC Tropical North

Meecham Philpott
Urea, mRNA vaccines, natural gas supply

MEECHAM PHILPOTT: So, on to something that's pretty fair dinkum. We've been contacted by a number of truck drivers just saying that the word on the street is AdBlue. It's something that you add to these modern tracks, which the trucks need, and as I found out, tractors use it as well. It's all about emission reduction and makes the vehicles run better and so forth. That there's a shortage apparently, according to the truckies that rang. There's a shortage of it. Plus, at the same time, had number of farmers get in touch and say, what is the go with urea? Apparently there's a shortage there. And fertiliser, the cost of, has gone through the roof. Now what's odd is all three things are all linked. So, we'll get on to the Federal Minister for Industry, Angus Taylor. I spoke to him a little bit earlier this morning, and clued the Minister into why we were making the call. Minister, let me just lay it out for you. I've been contacted by a lot of truckies, and they're very worried about AdBlue stocks but also a number of farmers have been onto me, they're worried about urea and also the costs of fertiliser, which is skyrocketing and I'm led to believe this all leads back to natural gas. So I'm wondering what the situation is from your point of view?

ANGUS TAYLOR: Well, that's exactly right, Meecham. So, urea is made from natural gas, it's used for- primarily as fertiliser for farmers to get crops growing well - it puts the green into your crops, if you like but it's also used for AdBlue, for trucks, and there has been a disruption in global gas prices. We've actually had much lower prices here than around the world, which has been fortunate but we have seen big escalation in global gas prices, and as a result, disruption in supply of urea. We have enough urea for provision for trucks and other vehicles, diesel vehicles who use AdBlue. We've got seven weeks in stock, and we have more on the way beyond that. But the markets are tight, and we're working hard to make sure we do have enough. It's not necessary to go out and buy additional stocks, that's unnecessary and it's unhelpful. However, we're making sure that Australia is in a position where we can handle this well. We do make urea here in Australia, Incitec makes it in Brisbane and we're looking to increase production of AdBlue as quickly as we possibly can, but we're also very conscious of making sure we've got enough fertiliser, particularly as we go into the winter crop in the new year, having enough fertiliser for all our farmers, and that's a big focus as well.

MEECHAM PHILPOTT: Okay. So our stocks for Australia, is it all made in Australia? I'm led to believe that we are very reliant on China.

ANGUS TAYLOR: We make some here and we import some. So it's a bit of both. And we can buy it from all around the world. Indonesia's a big producer, the Middle East, Saudi Arabia, Qatar, and elsewhere, and we're sourcing it from multiple sources. Traditionally, China has been a major producer of it, and China has stopped exports, and that's been part of what's had an impact, as they've been using more of their gas in their electricity grid. It's partly as a result of not taking Australian coal. So that has been an impact in the marketplace but as I say, we're across the issue. There is no need to go out and buy extra AdBlue, but we're working hard to make sure there will be no disruption in the future.

MEECHAM PHILPOTT: Minister, with the amount of natural gas that this country has, is this yet another one of these things that's popped up during the pandemic world that we're living in, where Australians are saying, well, we're going to have to start making all this stuff again?

ANGUS TAYLOR: Yeah. Well, look, that's absolutely right, and we've seen for the first time, more than a million Australians working in manufacturing, the first time since before we got into government. So we're seeing an increase in local manufacturing, which is absolutely fantastic and just today we've announced that we're going to be manufacturing mRNA vaccines, COVID vaccines, as well as flu vaccine here in Australia - one of the first countries in the world to do that, which is fantastic news. So we do need to make sure for those really critical goods, we have control over our own destiny and often that means manufacturing here in Australia, and that's been a big focus for this Government.

MEECHAM PHILPOTT: I'm just wondering why, Minister, that I've got truckies on the blower, and they’re well, not panicking, but they genuinely were worried about AdBlue. Is this, what, a case of Chinese Whispers, pardon the pun?

ANGUS TAYLOR: Well, no. I mean, there's no question there's been a disruption in the global market. I mean, the Chinese have stopped exporting it, and there's no doubt about that. However, we have seven weeks of stocks. We have more on the way, and we're working to make sure there isn't going to be a disruption but there has been a global disruption, and that's why you're hearing this noise. What's not necessary though, is to go out and buy more of it. There is enough. It's unnecessary and unhelpful to go out and buy extra, so it's really important we just buy the stock as we need it, we can handle that. I use it in my car, so I'm very conscious of this issue. There are some cars that require it, and my car does so I've been conscious of this issue for some time. Well, we are absolutely focused on it.

MEECHAM PHILPOTT: And something else that I learned yesterday too, is a number of modern tractors use it as well.

ANGUS TAYLOR: Yeah, you're right.

MEECHAM PHILPOTT: Particularly the ones throughout the fields in Mackay at the moment.

ANGUS TAYLOR: Yeah, that's exactly right. So, headers and tractors will often use it, and we're conscious of that as well, any of the newer ones since 2016 will tend to have it, and that's why, again for our farmers it's important. Of course, urea's important because it's fertiliser as well, and that's why it's crucial we have enough supplies. Or even more, in some cases, you've seen as much as a tripling of prices. You know, I'm very concerned about this, I'm very conscious of this issue. I live on a farm still, and I talk to farmers all the time, and it is a major issue. It's a major issue across the world, and getting more of our gas into fertiliser production in the next little while is a priority, and it's certainly something we're focused on as a Government. We've got to have that fertiliser there. Farmers are largely telling us they've got the fertiliser they need for the summer crops. It hasn't been cheap, that's very clear but as we go into winter crops, particularly in the south of the country, we're going to need to have that fertiliser available, and that's going to be a big focus.

MEECHAM PHILPOTT: Okay, and correct me if I'm wrong, with the regards to natural gas supply in Australia: not all- in fact, quite a percentage of it is reserved for domestic use, is that right?

ANGUS TAYLOR: Yeah look, we've seen for the first time, Australian gas prices not rising as international prices have risen. So to put it in perspective where we've seen international prices up around $40 a gigajoule, Australia has stayed closer to 10, which might be still higher than we'd like, but it's a fraction of what we're seeing globally. And that's partly as a result of more reservation of local gas, particularly in Queensland. It's also a result of just more supply of local gas, which has been a very good thing. We're one of the few countries in the world that has kept producing gas through the pandemic, and that's meant we've got more contained pricing, which is great news. It's the first time we've seen this kind of dynamic at work. So it's great, but we've got to stay on it and then the products that are produced from gas - and particularly, fertiliser - we've got to make sure we've got access to that as well.

MEECHAM PHILPOTT: But if we've got the gas, and we are making it in the country, then how does it go up by, as you were saying, in some cases, up 300 per cent?

ANGUS TAYLOR: Because of the global market and the global prices. You're talking about urea, I assume, and nitrogen fertilisers generally, which are all made from gas. So they follow the global prices and we saw a big spike in prices back in 2008, for instance, global prices. The good news is, more supplies are now coming on. The Middle East, we've been in discussions with them just in recent days, and they're upping production to meet this. We're looking to up production of AdBlue here in Australia, and urea more generally. We produce it, but, you know, we do need to see more supply, there's no doubt about it.

MEECHAM PHILPOTT: Alright. So overall, you're telling me: this is a hiccup on the radar rather than a trend of rising prices.

ANGUS TAYLOR: Yeah, well, we've seen- the prices have already gone up. I mean, the farmers who are listening will tell you they're already paying a hell of a lot more for their fertiliser than they were a year ago, I have no doubt about that, but you know, we are seeing more supply starting to come onto the market and it's important we don't want to get into hoarding, because that will cause its own problems. It's important that we continue to rely on those supply chains. We're working as a government to make sure that we've got access to it.

MEECHAM PHILPOTT: It's an old saying: what goes up must come down. But gee whiz, doesn't seem to work like that on prices for things like fertiliser.

ANGUS TAYLOR: Well, look, the last time we've seen prices like this was 2008. I remember it well. It was before I went into politics, and I've remained involved with agriculture all my life and it did come off reasonably quickly, just as it went up very quickly. You’ll have listener farmers who will remember that, over 10 years ago. I think it's quite a similar situation but the key thing for us as a government is to make sure we're getting that extra supply as fast as we can.

MEECHAM PHILPOTT:  Angus Taylor there, the Federal Minister for Industry, who also turns out to be the federal member for AdBlue, urea and fertiliser.