Australian farmers are facing mounting pressure as global supply chain disruptions linked to the war on Iran drive up fuel and fertilizer costs, compounding the impact of extreme weather and import dependence.
In Victoria, farmer Scott Young said a prolonged 18-month drought has left his paddocks barren, forcing him to rely on costly alternatives to feed his livestock.
"I've got a soil moisture probe here in this paddock actually showing our soil moisture is still right down. This year in fact, I've had it for about 5 years, was the lowest it's ever been," said Young.
While the drought left many farmers across the state struggling to turn a profit, rising fuel prices are further squeezing their margins.
"We started off doing budgets for diesel at 1.70 dollars, 1.80 dollars, now it's 3.20 dollars," Young added.
The surge in oil prices has significantly increased operating costs, particularly for fuel-intensive farm machinery.
"There's the availability that’s the first part - actually getting it on the farm. The second part is the cost. So, it's basically doubled," said Mark Billing, President of Dairy Farmers Victoria. Australia's reliance on imports, with about 90 percent of fuel and nearly all fertilizers imported, has made the sector especially vulnerable to global disruptions. Without sufficient fertilizer, farmers are forced to scale back production.
"If I haven't got the fertilizer, then once again I'm going to have to cut back on the livestock, and then cut back on what I'm going to earn for the rest of the year. And all of a sudden, you start to become unproductive. And it makes things really challenging," said Young.
The pressure is also impacting Australia's agricultural exports.
"The cost of getting containers and pallets and all of the things you need to put product onto a ship and shipping itself, insurance costs for shipping, all of those things to get our product to where it needs to be, is increasing as well. So, keeping our product competitive in that international market is a challenge," said Billing.
While global markets are becoming harder to compete in, farmers also have little room to raise prices at home, leaving them to absorb much of the cost increase themselves.
"I've already heard of numerous farmers who have cut back their operations, changed what they are putting in the ground. We've all accepted at the moment that we are not going to have the same productivity that we had last year. That's going to affect the industry and affect what we get to market later in the year," said Young.
And with no end in sight, farmers warn they may have to reduce herd sizes or leave the industry altogether, a development that would further strain Australia's stretched agricultural sector.
Australian farmers face mounting pressure as Middle East supply chain disruption hikes costs
