Explainer: Fuel and Fertiliser Security Facility – fertiliser price-risk support

What is the Fuel and Fertiliser Security Facility?

• The $10 billion Fuel and Fertiliser Security and Resilience Package is designed to protect Australia from global supply disruptions, such as the conflict in the Middle East, and strengthen long‑term energy and critical input security.
• As part of this package, the Fuel and Fertiliser Security Facility (FFSF) is a $7.5 billion mechanism delivered through Export Finance Australia (EFA) to support additional supply of fuel and fertiliser, using financial tools to enable shipments that would not proceed under normal market conditions.
  • For fertiliser, the FFSF can provide price‑risk support and other financial and risk management tools to enable importers to proceed with shipments in volatile markets, helping maintain supply during disruption.
  • Support is strictly limited to additional shipments that would not proceed otherwise, not business‑as‑usual (BAU) imports.
• The FFSF is designed to ensure certainty of supply into Australia.

How are companies eligible for the FFSF?

• Support is targeted to fertiliser importers that can deliver material volumes at scale and meet eligibility, risk and policy requirements. 
  • EFA is taking advice from DAFF and DISR on appropriate companies for the FFSF that meet the national interest. 
• Eligible importers must demonstrate:
  • a proven track record importing fertiliser into Australia, supported by strong biosecurity compliance;
  • ability to secure large‑scale shipments from a diverse range of international suppliers; and
  • established capacity to distribute at scale, delivering volumes that materially contribute to addressing Australia’s fertiliser shortfall.

How does price-risk support work for fertiliser? 

• Under the FFSF, EFA and each industry participant negotiate a financing agreement, which may include price risk support. 
  • Other forms of support can be considered on a case-by-case basis. 
  • No fertiliser is directly bought or sold by Government.
• The price-risk support is structured as a contract-for-difference structure, whereby Government partially covers the downside risk of prices falling; if prices rise, the benefits are shared with Government under agreed terms. 
  • The company can commit to shipments it might otherwise not, whether due to price or other risks.
  • In the absence of price-risk support importers may simply not buy, which could exacerbate a fertiliser shortage. 
  • Fertiliser sourced under the FFSF must be sold into the domestic market. 
• Initially, this support is targeted at securing agricultural-grade urea. 
• Currently, two companies have agreed commercial terms to access price-risk support for additional urea transactions, and a number of other companies are in the process of agreeing commercial terms. 
• FFSF participating companies will continue to operate in the market as usual. 
• If they identify a fertiliser shipment that they wish to request price support for, they must supply EFA with the details of the transaction. 
  • The transaction must be over and above BAU arrangements – as support will not be provided for transactions that are not genuinely additional to BAU operations. 
  • EFA is then required to consult the Department of Agriculture, Fisheries and Forestry (DAFF), and the Department of Industry, Science and Resources (DISR), to confirm whether the transaction meets policy requirements for price-risk support. 
• Companies which are not participating in the FFSF can continue importing and trading normally, but without the Government risk‑sharing on price movements.
• Retail prices will continue to be set by the market and reflect global supply, demand and costs among other factors.

What doesn’t it do?

• The FFSF: 
  • does not guarantee profit to participating companies;
  • does not block non-participating companies from operating in the market;
  • does not replace normal contracts nor support BAU contracts;
  • does not set or control fertiliser prices for farmers or retailers; and
  • is not a subsidy or price‑setting tool.

What does it mean for farmers?

• Farmers benefit indirectly from the FFSF.
• By reducing risk for importers, the FFSF supports the timely import of fertiliser into Australia, lowering the likelihood of supply shortages in critical periods during current market disruptions.
• Retail prices will still be set by the market and reflect global supply, demand, and costs. 
• However, where shipments are supported by the FFSF, Government covers downside-risk for falling prices (up to a limit); this may reduce some pricing pressure, but does not directly determine retail prices. 

What does it mean for non-participating companies?

• Fertiliser importers/companies which are not signed up to the FFSF may continue to operate normally in the market and can still import and sell fertiliser.
• Non-participating companies will not receive price‑risk support, meaning they will bear full market risk themselves.
• It is not feasible for Government to work with every importer. 
• Businesses seeking to work with EFA should first engage with DAFF and DISR.