Rising input costs squeeze farmer margins despite seasonal boost

Recent rainfall has given Australian farmers a timely boost ahead of the winter cropping season, but rising input costs are threatening to offset any early gains, according to Bendigo Bank Agribusiness’ April Monthly Commodity Update.

Improved soil moisture across key growing regions has allowed producers to begin sowing with confidence, setting the stage for what could be a strong start to the season. However, that optimism is being tempered by increasing costs for fertiliser, fuel and freight, driven in part by ongoing global instability.

Bendigo Bank Agribusiness Senior Manager Industry Insights, Eliza Redfern, said the combination of positive seasonal conditions and mounting cost pressures would define the months ahead.

“A favourable bank of soil moisture means farmers can get their winter crops off to a strong start,” she said.

“However, the benefits of that welcome rain will potentially be overshadowed by elevated input costs in response to global events. Australian farmers will be tested in the coming months as they face significant cost headwinds.”

The impact is already being felt across multiple sectors. In horticulture, rising production costs are forcing difficult decisions, with some vegetable growers choosing to leave crops unharvested due to the high cost of picking and transport. Others are planning to scale back plantings, which could tighten supply of autumn-sown produce later in the year.

While some categories are performing strongly — including avocados and stone fruit, which have recorded solid export values early in 2026 — others such as table grapes and dried fruit have struggled to maintain momentum.

In the dairy sector, producers are facing a margin squeeze on multiple fronts. Input costs remain elevated, while farmgate milk prices are expected to hold relatively steady into the 2026–27 season, limiting any immediate relief. A stabilising milk pool, strong global supply and rising processing costs are also expected to keep pricing conservative. Full season farmgate milk prices will likely land around this season’s esimate of $9.40/kg MS (southern indication).

Livestock markets are showing mixed signals. Lamb and mutton prices continue to strengthen, underpinned by tighter supply following a downward revision in flock numbers. In contrast, cattle prices have come under pressure due to higher transport costs, increased yardings and a softer export outlook, including the potential for tariffs in key markets such as China.

Grain markets are also shifting. Northern wheat and barley prices have firmed due to tight supply and reluctant selling, pushing values above southern markets. However, elevated input costs are dampening enthusiasm for new season planting, despite the improved seasonal outlook.

The wool market has also seen volatility, with prices easing after a period of gains, although demand from China continues to provide underlying support.

Overall, while recent rains have set the stage for a promising winter crop, the broader outlook for Australian agriculture remains finely balanced, as farmers navigate strong production potential against persistent and rising cost pressures.