Fuel and urea prices are rising: What it means for Australian farmers

Across Australia, farmers are again facing pressure from rising input costs, particularly diesel and urea fertiliser.

While volatility in global markets isn’t new to agriculture, the current situation is being driven by a combination of geopolitical tensions, global supply disruptions, and Australia’s reliance on imports. As we head into the seeding season for many cropping regions, these factors are beginning to impact farm planning and cash flow.

Let’s take a closer look at what’s happening.

Rising diesel prices are increasing operating costs

Diesel is one of the most critical inputs on any farm, powering tractors, harvesters, irrigation systems, freight and logistics.

Recently, global oil markets have experienced significant price increases due to tensions in the Middle East, particularly around the Strait of Hormuz, one of the world’s key oil shipping routes.

As a result, Australian farmers are seeing sharp increases in diesel prices, with some regions reporting prices well above previous seasonal averages.

For many businesses, this can translate into tens of thousands of dollars in additional fuel costs during seeding and harvest operations.

Higher fuel prices also impact:

• Freight and grain transport
• Fertiliser distribution
• Machinery operation costs
• Contractor services

In short, fuel price increases ripple across almost every part of the farm business.

Urea fertiliser prices are also climbing

At the same time, urea, the world’s most widely used nitrogen fertiliser, is becoming more expensive and harder to source.

Australia relies heavily on imported fertiliser, and the Middle East supplies a large portion of the global urea market.

Disruptions to supply have already pushed prices higher, with reports of 20% increases in some markets and urea prices now over $1,000 a tonne, since the latest conflict began.

For cropping farmers, urea is a key input for crops such as:

• Wheat
• Barley
• Oats
• Canola

Without adequate fertiliser, crop yields and quality can suffer, making it a cost farmers often cannot avoid.

Why you, as a farmer, feel the impact quickly

Australia is particularly sensitive to global fertiliser and fuel shocks for a few key reasons:

1. Heavy reliance on imports
   Australia produces only limited volumes of urea domestically, meaning global supply disruptions can quickly affect local availability.
2. Long supply chains
   Shipping delays or price spikes overseas can flow through quickly into Australian farm input costs.
3. Timing with seasonal operations
   Demand for fertiliser peaks during seeding periods, which can amplify price increases when supply is tight.

For many farmers, this means absorbing higher costs while commodity prices may not rise at the same rate.

Managing volatility is part of farming

Global input markets have always been cyclical.

Fertiliser prices have experienced major swings over the past few years due to supply shocks, currency changes, and global demand shifts.

While markets may stabilise over time, short-term spikes can still have a significant impact on farm cash flow and profitability.

That’s why many farm businesses focus on planning and financial visibility during uncertain periods.

The importance of budgeting in times like these

When input costs become unpredictable, clear financial planning becomes even more valuable.

Understanding how changes in fuel, fertiliser, or freight costs affect your budget can help you:

• Plan cash flow for the season ahead
• Assess the impact of rising input costs
• Compare scenarios before making purchasing decisions
• Maintain confidence in business decisions

This is where structured farm budgeting tools can make a real difference.

With Agrimaster, farmers can build detailed farm budgets, track expenses, and forecast the financial impact of changing input costs, helping you make informed decisions even when markets are uncertain.

Because while farmers can’t control global fuel or fertiliser prices, having a clear financial plan helps you stay in control of your business.

Are you an Agrimaster customer who hasn’t started budgeting yet, or do you want to get more out of your current budget and explore what-if scenarios?

• Join our Full Budget Training Webinar: Learn everything you need to successfully manage and forecast your farm’s cash flow.
• Get in touch with our Customer Success team: Update your budget, get started, or receive assistance tailored to your business needs.