Diesel and fertilizer pressure puts national supply chains under scrutiny

CURRENT pressure on diesel and fertiliser supply is colliding with one of the most critical points in the cropping calendar, with South Australian grain producers facing mounting cost, availability and planning challenges as seeding ramps up.

Grain Producers SA (GPSA) has warned that while some pressure on diesel deliveries has begun to ease, the situation remains highly volatile, with growers still grappling with supply uncertainty and rising costs at a time when operational decisions carry long-term production consequences.

GPSA chief executive Brad Perry said the realities on farm were exposing logistical and structural weaknesses in fuel supply during peak demand.

“What we’re hearing is that the delay in on-farm fuel deliveries has started to ease but we cannot reiterate enough that most grain producers don’t have enough fuel storage to have their full seeding requirements so they’ll need more deliveries over the coming months,” Mr Perry said.

“Over the past 6 weeks, grain producers have been telling us they are struggling to secure timely bulk deliveries as demand ramps up into seeding, which is forcing many to rely on filling up at the pump, and as our survey showed, often at the encouragement of suppliers”.

“That’s not how broadacre operations are designed to run, and it creates inefficiencies and further strain on supply.

“On top of that, more than 80 per cent of growers have limited on-farm storage and rely on regular deliveries, so when logistics tighten, it impacts them immediately.”

Mr Perry said the delays were also directly affecting farm profitability.
“The delays in on-farm bulk deliveries of diesel has also meant that grain producers are paying more for their fuel than when they ordered it, which is impacting profitability,” he said.

“We’re already seeing those decisions start to happen. Grain producers are telling us they are scaling back planned hectares, delaying operations where possible to save fuel, and reassessing input levels because they simply don’t have confidence around supply despite reassurances from Government”.

“Seeding is a critical window, and uncertainty at this point forces conservative decision-making. That has real implications for production, because once those opportunities are missed, they can’t be recovered later in the season”.

The diesel pressure is compounding an already challenging cost environment, with fuel, fertiliser and finance all weighing heavily on margins.

“Diesel is one of the largest input costs in a cropping program, so increases at this scale have a significant impact.” Mr Perry said.

“Across a typical program, that quickly translates into hundreds of thousands of dollars in additional, unbudgeted cost. When you combine that with already elevated fertiliser prices and interest rate pressures, it puts enormous strain on margins.

“Grain producers are weighing up where they can cut costs, whether that’s reducing fertiliser rates, limiting crop protection inputs, or simplifying their programs.

“With the soft grain prices and rapidly rising inputs, they’ve been left with very little choice.

“Those decisions can have direct consequences for yield potential and crop performance later in the season.

“It puts growers in a difficult position where they are managing short-term financial pressure at the potential expense of longer-term productivity off the back of a couple of really dry seasons.”

Fertiliser supply remains a parallel concern, with heavy reliance on imports continuing to expose the sector to global volatility.

Mr Perry said Australia’s dependence on imported inputs was a key vulnerability.

“Australia is heavily reliant on imported fertiliser, particularly nitrogen products like urea, which leaves the grain sector exposed to global supply disruptions,” Mr Perry said.

“Right now, the key risks are around availability, pricing and timing, and South Australian grain producers are reporting uncertainty about deliveries and ongoing volatility in pricing, which makes it very difficult to plan heading into seeding.

“Without strong domestic supply or strategic reserves, the system is vulnerable when global supply chains are under pressure.”

Mr Perry said this is not the first time Australians have faced these challenges.

“The system has been exposed like this before but not for this length of time,” Mr Perry said.

“We are seeing highlights on how dependent Australia is on imported inputs and just-in-time supply chains.

“That model works in stable conditions, but it becomes fragile when there are disruptions, and this situation has reinforced the need to look more seriously at fuel and fertiliser security as part of Australia’s broader food and fibre production system”.

Looking ahead, Mr Perry said the next phase of the season would depend heavily on supply stability.

“The biggest risks are reduced production, ongoing cost pressure, and continued uncertainty around input availability,” Mr Perry said.

“If grain producers cut back on inputs now or delay operations, that can flow through to lower yields later in the season.

“At the same time, sustained high costs and supply uncertainty make it very difficult for farm businesses to plan with confidence, but some marginal areas may have no choice but to leave hectares unsown due to the cost of inputs”.

Mr Perry said immediate action was needed to improve supply visibility and coordination.

“The immediate priority is transparency and coordination, and South Australian grain producers need clear information about supply availability and delivery timelines so they can make informed decisions,” Mr Perry said.

“We also need to ensure regional supply chains are prioritised during peak demand periods, particularly for bulk fuel deliveries to farm”.

Mr Perry said GPSA has been actively looking for government supported solutions.
“From a government perspective, we’ve been actively engaged through the Fuel Security Roundtable and pushed for the establishment of a fertiliser taskforce, which is now underway,” Mr Perry said.

“The focus now needs to be on practical outcomes that improve supply visibility and reliability, and in the longer term, this situation reinforces the need to strengthen Australia’s fuel and fertiliser security to reduce exposure to global disruptions.”

Grain Producers SA chair John Gladigau said the pressure was being felt most acutely in marginal areas still recovering from consecutive dry seasons.

“It’s an especially tough time for those in marginal areas who have been through 2-3 successive years of drought, to now be hit with this unexpected issue of availability of fertiliser and fuel,” Mr Gladigau said.

“For a lot of the state, and especially for the Northern Mallee region, this is one of the best starts to the year for a long time in terms of rainfall, with a lot of this area having between 70 -130mm of rainfall for March.

“Marginal areas need to maximise their opportunities when times are good to manage through the inevitable drier periods.

“This is a time with good sub soil moisture in the bank, when most farmers would normally be looking to claw their way back from the tough past couple of years and reset their farming operations, which requires extra fertiliser and fuel inputs.

“Most farmers are already financially limited because of the past few droughts, and both the increased price and difficulty in accessing fertiliser and fuel could not have come at a worse time.”

Mr Gladigau said cropping decisions were becoming increasingly difficult under current conditions.

“Across the state, there is certainly a swing away from the more nitrogen hungry crops like canola and wheat, towards barley and legumes, to manage the availability and incredibly high cost of urea, which has in some cases doubled in price since February – if you can even get it at all,” Mr Gladigau said.

“There are some incredibly difficult decisions farmers are needing to make, balancing the need to maximise the opportunity of the March rainfall to set up what could be an above average year, with the risk of sowing a crop at all – especially with the looming risk of a forecast super El Nino later in the year.”

“Unfortunately, we as farmers of commodity products cannot set our own sale prices - we are at the whim of the world markets, and while our inputs have risen significantly, the price of grain has not followed accordingly – and unlike other industries we cannot just add a fuel or fertiliser levy.”

Mr Gladigau said the increased tensions created by international conflicts are not helping the situation.

“The added pressures which have come from the Iran war have created a lot of inner turmoil in farming businesses, which is also greatly affecting the mental health and wellbeing of our farming communities as they try to make the best decisions in tough circumstances for their families and businesses.”

The situation is expected to remain a key watchpoint for the grains industry through the 2026 growing season, with supply chain reliability and input affordability continuing to shape production outcomes across South Australia.