Market and product

The risk of a failed 2026 winter crop is looming as the US-Iran conflict pushes fertilizer supply chains into a deadlock, forcing the Australian government to take urgent action.

The Australian federal government has established an emergency fertilizer coordination body as the US-Iran conflict has shut down the Strait of Hormuz — the country's key urea supply route — while importers are scrambling to secure alternative cargoes from suppliers that have never previously undergone Australia's biosecurity screening.

Emergency Response Body Established

On 31 March, Agriculture Minister Julie Collins announced the establishment of the Fertiliser Supply Working Group, bringing together key government agencies and two industry organizations: Fertilizer Australia and the National Farmers' Federation (NFF). The group's urgent task is to secure fertilizer supplies for Australia's large-scale agricultural sector, as the country imports approximately two-thirds of its urea from the Middle East, where shipping routes through the Strait of Hormuz are now almost completely paralyzed.

At the same time, the Australian Competition and Consumer Commission (ACCC) will be granted additional powers to monitor and coordinate fertilizer supplies and engage with alternative suppliers. The government also announced that it would guarantee private-sector fertilizer purchases — a measure originally designed for fuel supplies but now being extended to fertilizer buyers.

NFF President Hamish McIntyre said that the creation of the coordination body was "an important step forward," adding that the organization would continue working with the government to address the impact of the Middle East conflict on farmers and food production.

Earlier, on 17 March, Fertilizer Australia sent an urgent letter to the government warning that if shipping disruptions continued, they would have a "catastrophic impact on domestic agricultural output in the 2026 season." The organization called for the appointment of a single government contact point to coordinate regulatory, commercial, financial and logistics issues.

Importers Search for Unsanctioned Supply Sources

On the ground, Australian urea importers are being forced to turn to unprecedented supply origins — particularly Egypt and Nigeria — but neither country has yet received routine approval under the biosecurity standards of the Australian Quarantine and Inspection Service (AQIS).

AQIS has four levels of control. The lowest level for unapproved sources is Level 3, which requires comprehensive inspection — an extremely costly and time-consuming challenge when supply is already critically tight. Urea from Nigeria produced by Indorama is understood to qualify for Level 2 status, but according to trade data, no shipments from Nigeria have ever previously been imported into Australia.

Vessel classification is handled separately under the AFF1 and AFF2 systems. AFF1 is the higher standard and applies to vessels loading directly at the production plant — the configuration most likely to meet the requirements. By contrast, multi-purpose ports and open conveyor systems carry a greater risk of being classified as Level 3.

Why Is Australia So Vulnerable?

The answer lies in a decision made in 2022: when Dyno Nobel's Gibson Island plant — Australia's domestic urea production facility with an annual capacity of 499,000 tonnes — was shut down, the country became almost entirely dependent on imports.

In 2025, Australia imported around 3.7-3.8 million tonnes of urea, of which 64% came from the Persian Gulf region. Around 32% was imported from Southeast Asia, but most producers in the region had already sold out of March cargoes, while shipping to Australia's east coast typically takes two to three weeks.

According to vessel tracking data from Kpler, approximately 215,000 tonnes of urea are currently en route to Australia aboard eight vessels. However, domestic supplies are only expected to last until mid-April.

Price movements clearly reflect the severity of the crisis. Granular urea prices delivered to Geelong have risen continuously since the conflict erupted on 28 February, climbing from A$830-840/t to more than A$1,000/t, with some transactions reportedly exceeding A$1,400/t.

Farmers are increasingly turning to the alternative nitrogen source ammonium sulphate (amsul), but amsul inventories are also being depleted rapidly following a wave of panic buying. More worryingly, China — which supplied 99% of Australia's ammonium sulphate imports (575,400 tonnes in 2025) — has restricted fertilizer exports since 13 March.

Racing Against Time Before the Winter Crop Season

Timing has become critical. Urea demand peaks between April and June for planting and top-dressing winter crops such as canola, barley and wheat.

If sufficient fertilizer cannot be secured before then, many farmers may be forced to reduce their wheat acreage, switch to barley because of its lower fertilizer requirements, or plant legumes that consume less nitrogen.

AUSVEG, which represents the vegetable industry, has called on the government to "urgently" release a plan to ensure fertilizer imports, stockpiling and priority distribution to farmers.

Removing Import Barriers

On the policy front, Fertilizer Australia is urging the government to ease AQIS quarantine requirements — especially the Level 3 provisions, which significantly increase costs and delay deliveries.

The organization is also calling for the removal of barriers to Russian fertilizer imports, which currently cannot enter Australia because they lack certification from the Department of Agriculture, Fisheries and Forestry.

Fertilizer Australia's submission emphasizes that fertilizers are not subject to sanctions in the US, the EU or the UK, and argues that a temporary, narrowly targeted mechanism for fertilizer imports would help diversify supply options during this critical period.

Australia's urea crisis is an expensive warning about the risks of excessive dependence on a single supply region — and about the real cost of abandoning domestic production capacity.

Compiled from Argus Media (31 March and 2 April 2026)

https://www.argusmedia.com/en/news-and-insights/latest-market-news/2809524-australia-turns-to-less-established-urea-origins
https://www.argusmedia.com/en/news-and-insights/latest-market-news/2808162-australia-forms-fertilizer-body-to-tackle-supply-woes