Milk, fuel and fertiliser: How the Middle East war is impacting West Vic farmers

Farming is unpredictable at the best of times, but the war in the Middle East has now added another layer of complexity to Larpent dairy farmer Mark Billing's workload.

What’s going on: Since Israel and the US launched attacks against Iran on February 28, the war has spread to other parts of the Middle East, causing chaos in international shipping.

• Twenty percent of the world’s oil - and many other products, including the nitrogen fertiliser urea - have to pass from the Persian Gulf through the Strait of Hormuz into the Arabian Sea before being shipped east into Asia and to other destinations.

In retaliation, Iran blocked the Strait of Hormuz and threatened to attack cargo ships that attempted to run the gauntlet. Some ships that have tried to make the voyage have come under fire. 

Costs spike: Billing told the Brolga price spikes had sharpened concerns about the cost and availability of fertiliser, which underpins pasture growth across western Victoria’s dairy farms.

Take urea for example, a fertiliser typically used to boost grass growth during colder months.

🗣️ “Urea … which requires petroleum gas mainly to produce, has … gone from about $800 to $1,250 a ton,” Billing said.

He said he wouldn’t typically start using urea until the autumn break (the first major downpour of rain to signal the cropping season) had arrived, bringing moisture to start growing the grass.

🗣️ “Availability shouldn’t be too bad over the autumn, but if the situation in Iran continues, we’ll probably start worrying about urea supplies for the spring,” Billing said. “If we can't get urea, it's got a fairly significant impact on our pasture growth rates.”

Billing said impact on productions, together with increased cost, adds to existing financial strain. 

🗣️ “We're going to have to try and absorb that somehow … [and] we're still trying to recover financially from two years of drought.”

Time of the essence: While spring may still be several months away, the long lead time between urea production overseas, shipment to Australia and delivery to farms in western Victoria means supply could be affected at a crucial point in the season.

🗣️ “So we might be relying more on production out of China, for instance,” Billing said.

Fertilise the soil: Associate Professor at the University of Melbourne’s School of Agriculture, Food and Ecosystem Sciences, Roger Armstrong, told the Brolga’s sister publication the Gippsland Monitor our reliance on imports for fuel and fertiliser has long been an issue facing Australian farmers.

🗣️ “If it's cheaper to get imports, then that will tend to be [what we choose],” Armstrong said. “But in the long run we need to balance [the price] against the risk of not being able to access critical inputs.”

Why is the cost of urea so volatile? Professor Armstrong said natural gas was currently the most expensive element in producing urea. 

🗣️ “If there's an alternative to using fossil fuels, that'd be a win-win in the long-term, from both price and environmental perspective.”

• Urea has been successfully produced by using green hydrogen (renewable energy), but there are no production facilities in Australia.

How will this affect milk? Looking to the 2026-27 milk season, Billing hoped transport costs wouldn’t create too much “downward pressure”, as processors begin price discussions.

🗣️ “Whether it's moving milk from farm to processor, processor to market, and then even to get it shipped overseas - some of the countries that are being affected at the moment, we export dairy products to - it will have some impact on milk price next season.”

What about fuel?”. While Billing says he has a “fairly high level of confidence” that Australia won’t run out of fuel - and that most of the shortages are due to people stocking up - farming relies on this being ensured by decision makers.

🗣️ “I think the government needs to look at mechanisms that ensure that farmers have access to fuel for harvest, for sowing, and to run tractors for feeding animals. Basically without diesel, we can't farm. Simple as that,” Billing said.

🗣️ “Freeing up fuel reserves that Australia holds, which actually physically sit in the US - it sounds [like] there are moves globally to release some of those reserves to try and reduce the shock.”