How skyrocketing oil and resource prices will impact Australia's agricultural industry

The war in Iran has sent oil prices skyrocketing around the world, and the impacts are being felt across every major industry. In Australia, experts say the sector that will take the most substantial hit is agriculture—one of the country's largest economic drivers.

Murdoch University's Associate Professor in Sustainable Agriculture, Hanabeth Luke says rising costs, resource shortages and roadblocks for both importing, exporting and transporting goods will be just a few of the ripple effects Aussie farmers, and citizens, will feel.

"Planting, harvesting and managing crops requires a great deal of diesel, so rising prices and/or shortages will have an immediate impact on the hip-pocket of farmers."

Particularly impacted will be farmers in the Wheatbelt, who have properties that average 3500–5000 hectares.

"That's a lot of land and crops to manage. Electrification is one solution, but a piece of farm machinery can cost millions, so replacement of key infrastructure like this takes time—and it also needs to ensure that the technology can keep up. Electric tractors are out there and practical to use in horticulture and vineyards—especially those with solar and battery systems installed, but the tech is still experimental for broadacre farmers."

This will of course have knock-on effects for all Australians, including potential shortages and increasing cost of food and fiber products.

Another key impact is the rising price of ammonia, a synthetic nitrogen fertilizer. Ammonia production is currently reliant on about 2% of the world's fossil fuels.

"Nitrogen is literally everywhere—it's 78% of the air we breathe, but plants and crops can only use it in certain forms.

"The main way it is produced is the Haber-Bosch process, which pulls nitrogen out of the air, and turns it into a usable form for plants. However, this process takes a lot of energy."

Aussie farmers who have worked with Associate Professor Luke have told her they need to generate 3.5 tonnes of wheat per hectare just to break even. And good production levels in previous years won't mitigate these impacts.

"Bumper production years, as occurred in 2025, can actually reduce the dollars that farmers receive per tonne of wheat. Farmers are under pressure from multiple fronts, and rising costs at this scale present another major challenge they will need to deal with." But Associate Professor Luke says there are opportunities to pivot, and resources that could help to mitigate this impact.

"One potential solution is to plant more legumes—a major area of research in WA, and something we are working on at Murdoch University in partnership with DPIRD," she said.

"These plants are able to pull their own nitrogen from the air and make it available for themselves while building it up in natural forms in the soil."

These could be planted in several beneficial ways, including between rows of other crops, or in a rotational cycle with wheat and other crops.

WA farmers currently rely on international sources of phosphorus, an essential element for growing food and fiber—but with import costs rising, Associate Professor Luke said natural soil amendments were crucial.

"An important solution is to utilize more of the nutrients coming out of our cities and food production facilities, improving the re-circulation of nutrients and other wastes."

Murdoch University's Algae Innovation Hub, led by Professor Navid Moheimani, is currently looking into using algae to clean nutrient-rich water and turn it into useful fertilizer and feed products.

Associate Professor Luke said this was one example of how scientists could strengthen Australia's circular economy, turning waste into a resource.

"If we can see every challenge as an opportunity, and, as researchers, continue to ask the right questions, we can build a more resilient, sustainable and healthy agricultural system for WA and beyond."

Provided by Murdoch University