Prepared by Nicholas Bennett, Partner, Nexia Sydney – Agribusiness Specialisation
Australian agribusinesses are facing a renewed wave of cost volatility, with the Middle East conflict driving higher fuel, energy and freight prices across global supply chains. While external shocks are not new, the defining feature of the current environment is not just cost escalation – it is the speed at which margins are being eroded.
Fuel acts as a system-wide cost multiplier. Increases in diesel and energy costs flow rapidly through on-farm operations, inputs, processing and logistics. At the same time, disruption to shipping routes is pushing up freight and insurance costs while shortening pricing validity periods and extending input lead times.
For businesses with forward sales exposure or fixed-price contracts like the industry often has, there is a structural challenge: costs are moving faster than pricing mechanisms can respond.
The real risk: delayed decisions, not rising costs.
Businesses within the sector do not lose margin simply because costs increase – they lose margin because they react too slowly.
A key issue in 2026 is lag: the delay between cost increases hitting the business and the ability to recover those costs through pricing, contracts or operational changes.
In practice, we are already seeing pricing windows tighten materially in parts of the supply chain, while input costs continue to shift within those windows. That mismatch is where margin is lost.
What we see that strong operators are doing differently:
Turning cash flow into an early warning system
Leading businesses have moved to rolling weekly cash flow forecasts, with active scenario modelling across fuel, freight and receipt timing. Cash flow is no longer a reporting outcome – it is a forward-looking decision tool.
Re-pricing risk in contracts
Now is the time to actively review escalation clauses, pass-through mechanisms and pricing assumptions. Where cost increases cannot be contractually recovered, they must be addressed commercially – not silently absorbed.
Using working capital as a control lever
Disciplined invoicing, debtor management and inventory control are having an outsized impact on liquidity. In volatile conditions, working capital is often the fastest and most controllable lever available.
Engaging lenders before pressure emerges
Strong operators are bringing updated forecasts and clear mitigation strategies to lenders early. This preserves confidence and provides flexibility well before any constraints are reached.
Protecting downside in pricing decisions
In uncertain markets, underpricing to secure volume is often a value-destructive decision. Leading businesses are shortening pricing windows and clearly defining cost assumptions to avoid taking on unmanaged risk.
A governance lens
Periods like this rarely expose operational weakness – they expose gaps in financial discipline. Margin erosion within fixed-price contracts, reduced visibility over short-term liquidity, and delayed decision-making are the common failure points.
The takeaway
In 2026, margin will not only be determined in the field – it will also be determined in contracts, cash flow, and the speed of decisions.
The businesses that outperform will not simply manage costs better; they will identify risk earlier, act faster, and avoid funding volatility through their own balance sheet.
How Nexia can help
Nexia works closely with agribusinesses across NSW, supporting cash flow forecasting and scenario modelling, margin and contract analysis, lender engagement, and audit and assurance services.
Get in touch with us today.
