Supply chains built for efficiency are colliding with a world defined by disruption. In this context, Australia now faces a structural challenge in securing critical inputs such as fuel and fertiliser. Government, industry and consumers need to reset expectations, share the cost of resilience and act now to reduce exposure.
Covid-19 exposed the limits of globally optimised supply chains. The Iran conflict has reinforced the lesson under more complex conditions. Shocks no longer arrive sequentially; they emerge as continuous, concurrent and cascading pressures. Fuel disruptions, for example, are driving fertiliser costs, which in turn shape agricultural output and food prices.
For Australia, those fertiliser supply issues bring that system into sharp focus. Australia relies heavily on imported inputs to sustain agricultural production, export performance and food affordability. ASPI’s work has long warned that dependence, limited storage and weak visibility create structural exposure. Events in 2026 have shown how quickly that exposure becomes a policy problem.
A clearer understanding of the risk matters. Nitrogen markets have tightened rapidly, especially in urea. Phosphate presents a different challenge: geological availability of phosphate rock doesn’t guarantee fertiliser security. Vulnerability lies in processing capacity, storage, logistics, and trade systems that convert raw materials into usable products and move them to farms.
Fuel and fertiliser operate as a coupled system. Diesel enables planting, harvesting and transport. Fertiliser determines yield and output quality. Disruption in fuel supply increases input costs and constrains logistics. Disruption in fertiliser supply reduces productivity. Together, they create cascading effects across the food system.
Consider a single planting window. A delayed fertiliser shipment or a diesel shortage forces farmers to reduce application rates or scale back operations. Yields fall within one season. Food prices rise soon after. Export volumes tighten. A supply chain issue becomes an economic and social pressure in less than a year.
Policy should respond to that system, not to individual inputs in isolation. Australia’s current architecture struggles to do that. Critical minerals frameworks align with defence technologies and advanced manufacturing. Fertiliser sits outside that logic despite its national significance. The government should not force fertiliser into an ill-fitting framework. It should build a parallel approach for critical agricultural inputs, anchored in continuity of supply.
Three priorities should guide that effort over the next 12 months.
First, build national visibility. The government should establish a real-time picture of fertiliser and fuel stocks, flows, storage capacity and substitution options. The departments of Treasury, Agriculture and Home Affairs should lead a coordinated capability, drawing on industry data under clear legal safeguards. Without visibility, policy remains reactive.
Second, develop contingency tools before markets fail. The government should prepare mechanisms to underwrite essential imports during periods of disorder, examine targeted reserve arrangements for key inputs and establish coordination cells to manage distribution under stress. Preparation reduces the need for blunt intervention later.
Third, build domestic capability to reduce exposure. Support should focus on processing, storage and production that materially improves continuity. For phosphate, that means viable processing and storage capacity. For nitrogen, it means recognising the strategic value of domestic production. The government should avoid broad subsidy programs and instead target capabilities that expand sovereign options in a crisis.
Cost sits at the centre of these choices. Greater resilience requires investment in redundancy, diversification and domestic capacity. That investment will not be absorbed without consequence.
Consumers will resist higher prices at the pump and the checkout during a cost-of-living crisis. Industry cannot carry the burden alone. Costs imposed on companies flow through supply chains and ultimately return to households, including through superannuation funds that invest in those same firms. Government funding comes with its own trade-offs: higher debt, increased taxation or reduced services.
Australia, therefore, faces a distribution challenge as much as a supply challenge. A workable model should follow three principles.
The government should fund system-level resilience. That includes data, coordination, contingency mechanisms and, where necessary, strategic reserves. Those functions deliver public value and require national oversight.
Industry should invest in commercial continuity. Storage, diversified sourcing, contract structures and operational resilience fall under commercial responsibility. Policy should incentivise those investments, not replace them.
Consumers will absorb marginal cost increases over time. Price signals remain necessary to sustain supply and investment. Policy should smooth shocks rather than eliminate them.
That model does not remove trade-offs; it makes them explicit. It also provides a basis for policy decisions that balance resilience with affordability.
Fertiliser offers a test case for this approach. Farmers, input suppliers, logistics providers and governments all hold part of the solution. Policy should clearly define roles, set intervention thresholds and align incentives across the system.
The broader lesson extends beyond fertiliser. Fuel, energy, critical minerals and food inputs operate in interconnected systems. Disruption in one domain cascades into others. Policy needs to reflect that convergence, moving from isolated interventions to system-level resilience.
Efficiency will remain central to Australia’s economic model. Open markets and global trade will continue to underpin prosperity. Strategic competition and geopolitical instability now demand a recalibration. Resilience, redundancy and visibility should sit alongside efficiency as core design principles.
Australia cannot eliminate risk from global supply chains. But it can reduce exposure, strengthen preparedness and act before disruption compounds.