Fertiliser prices up 50% in weeks. Fuel rationed during planting season. WFO Vice President Fiona Simson on how the Strait of Hormuz crisis hit Australian farmers and why smaller producers are more exposed than larger ones.

The disruption in the Strait of Hormuz had a pretty much immediate impact on fertiliser and fuel in Australia, given our lack of domestic refining and fertiliser production and our reliance on imports — with close to two-thirds of our fertiliser imports coming through the Strait. Australia generally imports around 3.5 to 4 million tonnes of fertiliser a year. By mid-March, the price of urea had risen by 50% on values prior to the first air strike, with very scarce supply. At their peak, prices reached around AUD 1,300–1,500 per tonne (roughly USD 850–975*).

Because of winter crop planting time in Australia, this came at the very worst time, just as farmers were entering the main planting window between April and July. It was a double whammy: fuel was also rationed and very expensive. In some parts of the country, like the Liverpool Plains, farmers were simultaneously trying to harvest summer crops — sorghum and cotton — and needing fuel for that too, at exorbitant prices if they could get it at all. Fortunately, the Australian Government stepped in and, among other things, underwrote commercial purchases of fertiliser, which gave retailers the confidence to keep buying it and keep supply going, albeit at a very inflated cost.

Where smallholders and larger producers felt it the same — and where they didn’t

In the immediate shock, the impact was similar across the board: nobody could access the amount of fertiliser they normally would, and the price was prohibitive for smallholders and larger producers alike.

But looking at medium-term resilience, the picture changes. Larger farmers probably have better credit ratings than smaller ones, so on the whole they’re able to balance the risk better than smaller producers, who are far more exposed to input credit risk. The same gap shows up in sustainable fertiliser practices: agronomy for larger farmers is quite specialised, but there’s sometimes a significant gap between larger and smaller farmers, who aren’t always able to afford consultancy fees.

What’s helped, and what would help more

In the short term, the government introduced AUD 7.5 billion (roughly USD 4.9 billion*) fuel and fertiliser security facility, to give retailers the confidence to keep bringing fuel and fertiliser into the country. Farmers have also used as little fertiliser as possible in the short term, and — assuming better supplies and prices — will look to apply it once the crop is more assured.

In the medium to longer term, with good gas reserves but most of it exported, building domestic manufacturing capacity again is paramount. With climate change and the need for a net-zero transition, there’s a huge opportunity to make a lower-carbon product right here at home — but that will require policy to keep some of the gas onshore rather than exporting it.

What farmers want is a national approach across all agricultural industries in relation to fertiliser supply, and government support to underwrite farmer purchases — particularly for exposed smaller farmers.

Adapting fertiliser use for the long term

Many Australian cereal farmers now use no-till and cover-cropping technologies, preserving carbon and moisture in the soil and enhancing natural nitrogen levels with nitrogenous crops like field peas and beans, which often then form green manure — meaning subsequent crops need less fertiliser. Fertiliser application technology is also quite advanced in both vegetable and cereal farming, with application tightly measured and controlled according to soil and crop need and expected yield.