Articled updated July 2026
In 2022-2023, the Australian agriculture industry was valued at over $94.5 billion. Since then it's grown to a record high of over $100 billion in 2025-26, before ABARES forecast a 5% pullback to $98.3 billion for 2026-27. Input cost inflation is the biggest reason why. Let's take a look at how bad inflation has become for the agriculture industry.
Article Highlights
- Average broadacre farm business profits are forecast to fall 70% in 2026-27 (ABARES, June 2026).
- The gross value of Australian agricultural production is forecast to fall 5% to $98.3 billion in 2026-27, after a record 2025-26.
- Fertiliser and fuel price indices rose 43% and 14% respectively in 2025-26, with further rises forecast for 2026-27.
- Australian farmers receive some of the lowest levels of government support in the OECD, with producer support estimated at 2.7% of gross farm receipts (2022-24).
Inflation Challenges for Farmers
It's important to remember that a problem for Australia's agriculture industry is a problem for us all. Agriculture is unique in the sense that so much time, money, and effort goes into sowing fields and setting up for harvest - with very little certainty of how much profit will be earned come harvesting time.
This has led profit-concerned farmers to produce less product hoping that a smaller outlay might improve their chances of making money. Or at least limit their risk against further losses.
The resulting shrinkage in production has led to food shortages, accompanied by price hikes in certain sectors. So what is affecting agriculture the worst right now?
Rising Input Costs
Input costs have gone up across the board. Fertiliser is a big one, having risen by over 156% between 2020, and ABARES estimates a further 43% rise in the fertiliser price index in 2025-26 alone, with more increases forecast for 2026-27. Fuel has followed a similar path, up 14% in 2025-26 with another 11% forecast this financial year, particularly hitting diesel. Feed costs for livestock agriculture have also spiked, adding to margin pressure across the sector.
Supply Chain Issues
Then there are the problems facing agriculture supply chains. Transport costs for shipped goods have risen while also causing delays for farmers trying to get vital resources for their production. Ongoing conflict in the Middle East has added to this, with the OECD linking a sharp rise in global fertiliser prices to shipping disruption through the Strait of Hormuz.
Labour Shortages and Wages
The agriculture industry is facing a talent crunch. Due to a lack of seasonal workers as well as people moving out of the agriculture industry in general, farmers are struggling to fill roles on the farms. Similar to the hospitality industry, this worker shortage is also pushing wages higher, further straining the margins in the agriculture industry.
Limited Government Support
Australian farmers receive very little in the way of government support. In fact, Australia has some of the lowest subsidy rates of any developed economy in the world. The OECD's latest figures put Australian farmers' government support at 2.7% of gross farm receipts (2022-24), among the lowest of the 54 countries in its report.
At Choice Energy, we can't help with all of the issues listed above, but we can help agriculture businesses save on one of the largest expenses of all - their energy bill.
How Rising Costs Are Playing Out by Sector
The pressure isn't even across Australian agriculture. How exposed a business is depends on how much it relies on fertiliser, fuel and irrigation, and how it's been affected by seasonal conditions.
Cropping and grain
This sector is being squeezed from two directions at once.
ABARES forecasts total crop production value will fall 8% to $50.9 billion in 2026-27, with winter crop production down 21% due to drier conditions and higher input costs.
Average profit on cropping farms is forecast to fall from $810,000 this year to $280,000 in 2026-27.
Livestock
Livestock and livestock product value is forecast to ease 2% to around $47 billion in 2026-27, down from a record 2025-26. At the retail end, red meat remains the strongest driver of annual food inflation, with beef and lamb prices both up around 9% over the past year. The gap between softer farm-gate returns and firmer shelf prices is worth watching.
Dairy
Milk prices are running roughly 4% higher than a year ago at the retail level, a relatively firmer position than some other categories. That said, feed, fuel and the energy needed for cooling and processing still apply in full.
State differences
ABARES data points to average farm business profits in New South Wales swinging from $161,000 this year to a $16,000 loss in 2026-27, while Western Australian farms are forecast to average $151,000.
How Agriculture Businesses Can Save On Energy
There are a few key ways that we've helped agriculture businesses, both large and small, to save big on energy. Take Murray River Organics, for example, Choice Energy saved them $200,000 over a three-year term - and we can do the same for you.
Energy Audits and Efficiency Measures
The best way to start saving money on your energy bills is to have us perform a thorough free energy assessment. In this assessment, we identify inefficiencies in energy use and make recommendations to improve.
This includes practices like demand management; where we advise your agriculture business on how to manage the amount of energy used during peak pricing periods. For agricultural businesses, this could mean practices like shifting irrigation to off peak hours or staggering the use of high-energy consuming equipment.
We can also help with network tariff optimisation. These are the fees that you incur for the delivery of your energy. But if your farm regularly uses less energy than your current tariff allows for, this can become a quick win that instantly starts saving you money.
Energy Procurement
Our energy procurement service is designed to help each of our clients to source the most competitive rates on the market. With unfettered access to up to 13 energy retailers, our expert consultants perform contract negotiations, market analysis, and timing purchases to get you the best deal possible.
Energy procurement for small businesses is a key part of our service. We help to negotiate customised contracts based on an in-depth analysis of your usage patterns. We also help small farms to set up infrastructure allowing them to avoid peak usage times and save on their bills in other ways.
For larger businesses, our commercial energy procurement service involves securing group procurement tenders, helping farmers in the region to pool their energy demand. We also help you secure flexible contracts and provide regular monitoring of the market to ensure your deal remains the best one available.
Commercial Solar
Solar energy is a game-changer for agricultural businesses. By installing solar systems, farms can power energy-intensive operations like irrigation, refrigeration, and processing while reducing their reliance on the grid. With government rebates and feed-in tariffs available, commercial solar not only lowers energy costs but also creates opportunities for long-term savings and greater sustainability.
If you’re ready to take back control of your energy bill, get in touch with the Choice Energy team today for a free energy assessment.
Case Study: Irwin Stock Feeds
Irwin Stock Feeds provides quality feed to dairy and beef farms across Victoria, with a head office in North Melbourne and mills in Lang Lang and the Goulburn Valley. With rising costs across the state, Choice Energy undertook multi-site energy procurement across all three locations, presenting the business's needs to up to sixteen retailers to secure the best offer available.
As a result, Irwin Stock Feeds is projected to save $280,000 over a three-year period, with all three locations included in the procurement.
Read the full story on our Irwin Stock Feeds case study page.
