From Dubai: The geopolitical crisis unfolding across the Middle East this week has drawn the usual focus on oil markets and shipping delays. Yet the real threat to Australian food security runs deeper, through supply chains that few farmers think about until they break.
Australia gets half its urea – a crucial nitrogen fertiliser – from countries now impacted by the war. That simple fact explains the alarm spreading through rural Australia as a joint Israel-US military operation targeting multiple locations across Iran and Iran's retaliatory attacks across the region have left the Strait of Hormuz functionally closed to commercial shipping. This narrow waterway is not merely an oil artery; it is also the world's most critical fertiliser route.
The regional dynamics at play are more complex than the headlines suggest. A third of global fertilizer supply passes through the Strait of Hormuz, while gas from the region is crucial to production of nutrients for global agriculture. Iran exports around 5 million metric tons of urea per year, representing roughly 10% of global trade. Saudi Arabia contributes approximately 4 to 5 million metric tons annually through SABIC and related producers. Oman and the UAE add several million metric tons combined. Collectively, more than 15 million metric tons of annual export capacity sits inside the Gulf.
CSBP Fertilisers general manager, Ryan Lamp, said the conflict in the Middle East meant their fertiliser programs were changing by the hour, noting that it was possible that some shipments of ammonium phosphate cropping compounds and urea that CSBP had ordered would be delayed. Industry sources across Australia report similar uncertainties playing out in real time.
The immediate cost impact is already visible. Urea prices have already increased from $466 per tonne to $590 per tonne in three days. Commonwealth Bank of Australia agricultural economist Dennis Voznesenski predicted that the current conflict was "likely to lift fertiliser prices and negatively affect farmer margins." What makes this crisis distinct is the timing. Prices were already high before the latest conflict in the Middle East erupted, and the fresh tensions come as Northern Hemisphere farmers are set to start applying the products to their fields.
For Australia's energy sector, this signals deeper vulnerabilities that extend well beyond fertilisers. The nation imports around 90 per cent of its refined petrol and diesel. While the government says Australia is currently above its own minimum petrol stockholding obligations and holds more fuel than at any time in the past 15 years, total oil reserves sit at just 50 days - well below the 90-day benchmark used by the International Energy Agency.
What Western coverage frequently misses is the asymmetry in how disruption affects different nations. Research suggests higher food prices aren't a given. In wealthy agricultural exporters like Australia and the United States, supply constraints typically translate into margin pressure rather than shortages. Farmers can absorb moderate cost increases; they adjust application rates and yields decline modestly. But farmers who have not locked in supply already are most exposed, and a small-sample-size survey found 40pc of respondents had so far secured less than half of their fertiliser requirements for this year.
Yet Australia's exposure to global supply shocks is not merely an agricultural problem; it is a strategic one. Unlike crude oil, where nations maintain strategic reserves, fertilizer trade operates on a just-in-time basis with no equivalent strategic stockpile to offset a prolonged disruption. For a nation that exports significant agricultural volumes globally, supply chain resilience has become inseparable from national interest.
Reasonable people can disagree on whether fertiliser reserves should be classified as national infrastructure. Centre-right advocates for fiscal restraint argue that storing fertiliser is inefficient compared to maintaining stable trade relationships. Progressive voices counter that long-term food security justifies upfront investment. Both positions have merit. The evidence suggests a middle path: diversifying supplier relationships, investing in regional ammonia production capacity, and maintaining modest strategic reserves focused on the riskiest periods – the Northern Hemisphere planting season – represents sound economic stewardship without warehouses of obsolete materials.
Australia has been urged to follow the lead of the United States, which has formally elevated agriculture as a key element of national security, and urgently complete its own National Food Security Strategy to help shield farmers from global supply shocks, including disruptions to fuel, fertiliser and other critical inputs. Whether through diplomatic pressure to stabilise the Strait, investment in domestic production capacity, or strategic reserves, Australia's policymakers face a choice: treat agricultural supply chains as matters of national importance now, or respond to crises after they arrive.