Farmers across Australia are making significant changes to their crop selection as skyrocketing fertilizer and fuel expenses linked to the Iran conflict force agricultural decisions in one of the globe’s major food-producing nations.
Agricultural producers are increasingly choosing barley over more nitrogen-dependent crops like wheat and canola as planting season accelerates throughout much of the country this month. These crops require substantial nutrient supplies to support initial growth phases.
Urea prices in Australia have reached approximately A$1,350 ($928) per ton this week, representing a 60% increase since the start of the U.S.-Israeli conflict with Iran, according to market analysts. Australian diesel costs have jumped 88% during the same timeframe.
“Farmers are trying to reduce fertiliser application and switching planting from nitrogen hungry crops like wheat and canola into feed barley,” explained Dennis Voznesenski, an agricultural analyst at Commonwealth Bank of Australia.
“Some are also reducing planted area, but this so far is minimal,” Voznesenski added.
Industry experts predict Australia’s wheat cultivation could decrease by 10% to 12% under current circumstances, down from 12.4 million hectares planted last year. Canola production is also expected to fall despite better profit margins, according to unnamed agricultural brokers and analysts.
As the world’s fourth-largest wheat exporter and second-biggest canola supplier, Australia serves customers throughout Asia, the Middle East and Europe. The nation also produces barley, chickpeas and various pulse crops.
Global farmers face similar challenges securing fertilizer supplies as planting seasons begin in major agricultural regions. The Iran war has severely disrupted the Strait of Hormuz, a critical shipping route handling 30% of international fertilizer trade.
Bank of America has issued warnings that the conflict endangers 65% to 70% of worldwide urea supplies, a crucial nitrogen fertilizer, with prices already climbing 30% to 40%.
The U.S. Department of Agriculture reported this week that American farmers intend to plant less corn and increase soybean acreage in 2026 compared to last year. Meanwhile, China has restricted fertilizer exports while India seeks alternative supply sources for summer crops.
Wheat, corn and canola typically demand higher urea applications compared to barley and pulse crops.
“Australia typically relies on China for urea, but export curbs have limited shipments,” noted StoneX analyst Josh Linville.
“Buyers turned to Indonesia, only to face further constraints there and by the time they sought supplies from the Middle East, the war had already started and the Strait of Hormuz had closed,” Linville explained.
Agricultural crops require fertilizer during initial planting as well as during growth and pre-harvest stages. Crops planted in April and May are typically harvested in November and December.
“It is a big issue as the cost of farming has risen sharply in the last one month,” stated Tobin Gorey, founder of commodities consultancy Cornucopia in Sydney.
