Australian vegetable growers face rising costs across fertilizer, fuel, and energy

AUSTRALIA – Australian vegetable growers have entered 2026 under sustained financial strain as costs linked to fertilizer, fuel, energy, and compliance remain high, while returns show limited improvement.

Recent inflation figures underline the challenge. Australia’s Consumer Price Index rose by 3.8 percent in the twelve months to December 2025, up from 3.4 percent in November. That rise has filtered through the supply chain and into farm budgets, adding to pressure already felt throughout last year.

The 2025 Vegetable Industry Sentiment Report from AUSVEG shows the scale of concern across the sector. Two in five growers said they are seriously thinking about leaving vegetable production. Rising input costs and poor returns ranked as the main reasons. One grower quoted in the report said “we face higher costs at every stage, but the prices we receive stay flat.”

Fertilizer markets remain exposed

Fertilizer prices remain a key focus for growers. In December, granular urea traded at A$760 to A$770 per tonne FCA Geelong, (about US$500 to US$508 per tonne). Prices stood well below September levels of more than A$900 per tonne (US$594), yet data from January points to a slight increase.

Australia imported 194,500 tonnes of urea in November 2025, more than double the volume imported in the same month of 2024. Market tension increased in January after the United States announced a 25 percent tariff on countries trading with Iran. Iran supplies about 10 percent of global urea exports, raising concern over tighter supply and higher prices.

Demand for phosphate fertilizers has remained firm. GrainGrowers reported that around 373,000 tonnes of MAP and DAP were in transit to Australia across nine vessels in late December. The group said “demand remains steady, even after a softer period following Christmas.”

Fuel and energy costs stay high

Diesel prices eased slightly in early January after exceeding 190 Australian cents per litre in October, equal to about US$1.25 per litre. Prices have since shown signs of rising again. Australia imports close to 70 percent of its diesel, leaving growers exposed to global price shifts.

Wholesale electricity prices declined slightly toward the end of 2025 as renewable generation increased across the National Energy Market. Despite this, growers report no meaningful relief. “Electricity bills remain one of our largest and most difficult costs,” a grower in Victoria said.

Retail food prices rose 3.4 percent over the year to December, while vegetable prices increased by 3.8 percent. Growers say these rises have not translated into stronger farmgate returns.

As 2026 unfolds, Australian vegetable growers remain under pressure from high input costs, regulatory demands, and global uncertainty, with little room to recover margins in the near term.

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