Australia’s agricultural landscape is feeling the strain as international conflicts seep into farmlands, prompting farmers to scale back on planting and cautioning consumers about impending hikes in grocery prices.

The spotlight has turned to a segment of the supply chain that rarely crosses the minds of everyday shoppers—until now.

Fertilizers and diesel, crucial for contemporary farming, navigate through the shipping lanes of the Strait of Hormuz.

When disruptions occur in this vital passage, prices soar, and supplies dwindle, forcing farmers to reconsider whether planting is financially viable.

Matthew Evans, a chef, farmer, and author, emphasized that the ongoing crisis has exposed Australia’s vulnerabilities.

“The current situation serves as a wake-up call,” Evans remarked.

“Our entire food system relies on imported fertiliser and diesel. When that gets disrupted, everything gets more expensive, and that flows straight through to supermarket prices.”

New figures from AUSVEG show more than a quarter of vegetable growers have already reduced or halted planting.

The impact won’t be exclusive to farms. Tighter supply later in the year is likely to push up prices for everyday staples like bread, pasta and beer – not just fresh produce.

Toowoomba grazier and agricultural services system DIT AgTech founder Mark Peart said farmers are already adjusting their operations to stay afloat.

“Some are cutting back on fertiliser use, some are reducing stock numbers, and others are delaying or rethinking parts of their operation because the cost of diesel and inputs has become so unpredictable,” he said.

Peart said uncertainty is driving those decisions, with farmers often unsure what they’ll be paying or if supplies will arrive on time.

“We’re also seeing a move towards efficiency – farmers are looking at ways to use less diesel, reduce labour and get more out of what they’re already doing,” he said.

Cutting costs can only go so far in a system built on imported fertiliser and fuel.

University of Sydney senior economics lecturer Chandana Maitra said the problem sits at the core of how Australian farms, with urea – a nitrogen-rich compound used in fertilisers – and diesel both sourced from overseas.

When shipping routes run into trouble, fertiliser becomes harder to secure. At the same time, higher fuel costs run through every stage of farming, cutting output and lifting prices.

Australia relies on imported fertiliser, much of which moves through key shipping routes such as the Strait of Hormuz, a critical global chokepoint.

The result can be broader price pressures across the economy. If sustained, this may delay interest rate cuts or keep inflation elevated for longer.

The Middle East is also an important market for some Australian agricultural exports. Ongoing instability could weigh on export earnings, while disruptions to fuel and fertiliser markets continue to drive up costs at home.

Evans said the focus now should be on how the nation responds.

“This might be the moment that finally forces us to rethink how we grow food,” he said.

“Because it doesn’t have to be this way.”

China’s move toward electrified transport and logistics shows how quickly systems can change across industries. With less diesel in the mix, its urban transport and delivery networks are less exposed when oil prices spike.

For Australian farmers, attention is now turning to the winter planting window – a key period that will determine supply later in the year.

Many are already scaling back after successive shocks, including COVID-19 and the war in Ukraine, both of which drove up fertiliser prices.

“At some point, you have to ask, how many times do we need to learn the same lesson?” Evans said.

Evans sees an opportunity at the farm gate. Healthier soils, using less fertiliser and a wider mix of crops can ease the burden on farmers in the long haul.

“It’s small, practical changes that reduce costs, improve soil, and make farms less dependent on expensive inputs,” he said.

Australia still produces enough food to feed three times its population and exports most of what it grows – a strong position, though one Evans said won’t hold without adapting to volatile markets.

“We have the land, the knowledge and the people. What we need now is to apply that knowledge in a way that makes us less exposed to global shocks.”

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