The Fertiliser Crisis: A Hidden Threat to New Zealand and Australia’s Agricultural Powerhouses
New Zealand and Australia are often seen as leading food producers in the global market. However, a growing crisis is beginning to reveal a critical vulnerability in their agricultural systems: an over-reliance on imported fertilisers. With conflicts in the Middle East and trade restrictions from China disrupting supply chains, these countries face a potential food security risk that could have far-reaching economic consequences.
Fertilisers play a crucial role in agriculture by supplying essential nutrients such as nitrogen, phosphorus, and potassium. These elements help crops grow faster and animals feed more efficiently. For New Zealand, which is one of the world’s largest exporters of dairy, beef, and veal, and for Australia, where around 70% of its agricultural output is exported, the impact of a fertiliser shortage would be significant. Without access to these vital inputs, exports would decline, and the broader economy could suffer.
Concentrated Production, Global Vulnerability
The problem lies in the fact that fertiliser production is concentrated in just a few countries. More than 80% of nations import at least 75% of the fertiliser they use. This means that any disruption in the supply chain—whether due to war, trade bans, or blocked shipping lanes—can affect all countries relying on these imports.
One of the most critical chokepoints in this system is the Strait of Hormuz, a narrow waterway between Iran and the Arabian Peninsula. It carries about a quarter of all seaborne oil, along with large quantities of natural gas and fertiliser. The ongoing conflict between the US, Israel, and Iran has put this passage under serious threat. If it were to be blocked, supplies could be halted for weeks or even months.
Gulf countries, including Iran, Qatar, and Saudi Arabia, currently supply 36% of all global urea exports. Urea, the most widely used nitrogen fertiliser, is made from natural gas. When gas prices rise—as they have since the war escalated—it becomes more expensive, ultimately affecting consumers at the supermarket checkout.
In addition, China, another major player in the fertiliser market, has restricted its exports, further driving up global prices and reducing availability.
A Growing Concern Among Global Economic Bodies
The situation has raised alarm among the world’s top economic institutions. Earlier this month, the heads of the International Energy Agency, the International Monetary Fund (IMF), and the World Bank met to coordinate their response. Their joint statement highlighted the rising concerns about food security due to higher oil, gas, and fertiliser prices.
The IMF’s latest report, “Global Prospects and Policies,” warns that food security could be threatened, with disruptions to fertiliser markets ahead of the planting season leading to substantial food price inflation. Farmers need fertiliser most just before planting. If it doesn’t arrive on time or arrives at a much higher price, harvests will be smaller, resulting in higher supermarket prices.
Calls for Action and Alternative Solutions
Despite the growing risks, both New Zealand and Australia have yet to develop a comprehensive plan to address this issue. Angela Clifford, CEO of Eat New Zealand, has long questioned the country’s food security strategy. She recently warned that New Zealand tends to “lurch from crises to crises without doing the work in between times to make us more resilient for the next time.”
In Australia, the peak grain body GrainGrowers has called on the government to establish a fertiliser taskforce, create strategic reserves, and diversify suppliers. There are also opportunities to explore alternative solutions, such as biofertilisers, which use living micro-organisms in the soil to help plants access nutrients naturally. These offer a less dependent and more environmentally friendly alternative to traditional fertilisers.
Another long-term opportunity lies in producing urea locally using green hydrogen. The government-industry Kapuni Project, a first-of-its-kind effort to combine wind energy, renewable electricity, and green hydrogen production, is set to begin operating in 2027. This initiative aims to produce “greener” nitrogen fertilisers and lower emissions.
A Recurring Challenge
The fertiliser challenge facing New Zealand’s agricultural sector is not new. Fertiliser prices spiked after the COVID-19 pandemic and again after Russia invaded Ukraine in 2022. New Zealand’s geography and exposure to extreme weather events add another layer of risk to an already fragile food supply chain.
Experts have called for a national food strategy, but nothing has been done. The war in the Middle East and major exporters’ trade restrictions are the latest warning in a long line. The question remains whether New Zealand will act this time or simply wait for the next costly crisis.
