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From Input to Impact: Rethinking Nitrogen Fertiliser Policy
- 2025 Global Voices Fellow
- 5 days ago
- 13 min read
Elannah Young, AgriFutures Australia, UNFAO World Food Forum Fellow
Executive Summary
Nitrogen fertiliser is vital to Australia’s $91 billion agriculture sector. Although essential for food security and the economy, inefficient use drives emissions and harms soil and waterways. Producers also lose up to $1.25 billion each year from nitrogen fertiliser that does not directly improve productivity. Current state-based labelling policies leave farmers without consistent, site-specific support for optimising nitrogen use.
Three policy options for addressing inefficient fertiliser use are explored: (1) national environmental risk labelling, (2) free soil testing kits, and (3) an Australian Carbon Credit Unit (ACCU) methodology to incentivise inhibitor use. The recommended approach is mandatory on-pack environmental risk disclosure. This would improve decision-making transparency and stimulate industry innovation.
Overall, the proposed policy balances feasibility, cost and impact while supporting sustainable farm outcomes.
Problem Identification
Australia’s $91 billion agriculture sector depends on fertiliser to optimise yields, ensure food security, and support export markets (ABARES, n.d.). Optimisation of farm inputs is critical to profitability, especially as Australian farmers are among the least subsidised in the developed world (Greenville, 2020).
The economic consequences of improper nutrient management are considerable. Lost productivity and the remediation of acidified soils caused by nitrification are estimated to cost the Australian economy $1.58 billion annually (Webb et al., 2021). Australia imports $2.5 billion in nitrogen fertilisers each year (DAFF, 2025), yet on average only 30–50% of applied nitrogen is taken up by crops, with the remainder lost to the atmosphere as emissions or waterways by leaching (Chen et al., 2008). Assuming a 50% uptake rate, growers spend approximately $1.25 billion annually on nitrogen that does not contribute to productivity (Chen et al., 2008; DAFF, 2025). Land-specific soil data informs optimal fertiliser application rates, yet soil tests are conducted infrequently. As a result, many application decisions rely on guesswork, which may lead to increased spending on fertiliser, yield differentials, or preventable environmental disturbance. Higher input spend impacts farmers and food prices for Australian consumers.
Furthermore, nitrogen volatilisation from excess fertiliser contributes to increased greenhouse gas emissions and ecosystem damage. Agriculture accounts for 19.2% of Australia’s emissions (DCCEEW, 2024), with around 3% of the total emissions inventory attributable to fertiliser use (Sullivan, 2023). The sector’s capacity to minimise environmental impact and maximise farm productivity is constrained by limited access to land-specific data on best-practice fertiliser application.
Inefficient fertiliser use is costing Australian farmers, consumers, and the environment. Whilst overuse causes excess emissions and environmental impact, underuse may reduce yields, farm profitability, and consumer pricing. Current policy does little to improve the management of nitrogen fertiliser on a national scale.
Context
Nitrogen Fertiliser and Its Importance
Nitrogen is a critical nutrient for plant growth, yet it is often the most limiting factor in agricultural ecosystems (Norton et al., 2023). Global expansion of fertiliser use has been pivotal in expanding food supply and supporting population growth. The average Australian farm applies 1.066 Mt of nitrogen annually (FAO, n.d.), an increase of 900% since the 1960s (Kraak et al., 2024).
When used efficiently, nitrogen can deliver two to four times return on investment (Norton et al., 2023). However, increased usage can be a catalyst for environmental degradation. Conversely, nitrogen underuse may impact farmer profitability through yield reduction and increase the amount of land required to meet growing needs.
Environmental Impacts
Fertiliser overuse can be damaging to ecosystems and, in some instances, reduce long-term land productivity:
Nitrogen Volatilisation Emissions: Fertiliser creates emissions during sourcing, production, logistics. However, the majority is caused by chemical processes when applied to soil. 58.6% of emissions for synthetic fertiliser are attributable to the volatilisation process of Nitrous Oxide (N₂O) from land into the atmosphere (Menegat, et al.,2022). N₂O has 273 times the global warming potential of CO₂ (Clean Energy Regulator, n.d.).
Nitrogen Leaching: Excess nitrogen is carried by water to enter waterways, causing eutrophication, algal blooms, and impacts such as outbreaks of Crown-of-Thorns on the Great Barrier Reef (AIMS, n.d.). Leaching also degrades seagrass meadows, key carbon sinks that sequester up to 5.6 Mt of carbon dioxide equivalent emissions (CO₂-e) per year (ABS, 2022).
Soil acidification: Overuse of ammonium-based nitrogen fertiliser releases hydrogen ions during nitrification, lowering soil pH and reducing fertility, biodiversity, and long-term productivity (Sustainable Soil Management, 2025). Remediation to maintain productivity can be costly.
Underuse of fertiliser may also leave soils depleted and increase the amount of land use required to meet yields. An increase in land use may cause environmental harm, including land clearing, increased net fertiliser use to cover the total area, and increased leaching into ecosystems adjacent to new agricultural land.
What policies are currently in place?
Australian policy lacks a consistent federal fertiliser framework. The non-governmental body Fertiliser Australia has developed labelling recommendations to help companies comply with regulations across all states and territories. (Fertiliser Australia, n.d.).
Some state-based labelling regulations exist; however, these are inadequate as they only cover heavy metals, nutrients and human health warnings. Environmental health warnings, including leaching risk, volatilisation rates and emissions, are not addressed. There is also currently no unified guidance on dosage rates, application based on weather conditions or other land protection measures.
Further to the state-based labelling requirements, the following frameworks relate to soil, land use and agricultural chemical use:
Agricultural and Veterinary Chemicals Code Act 1994, managed by Australian Pesticides and Veterinary Medicines Authority (APVMA), details the labelling requirements, constitution, health warnings and use instructions of agricultural chemicals, but currently excludes fertilisers.
The Department of Climate Change, Energy and Water’s (DCCEW) National Soil Strategy - allocated $214.9 million to improving Australian Soils (DCCEW, 2021), which includes a $15 million investment in developing an improved Australian National Soil Information System (ANSIS) (ANSIS, 2026). The National Soil Strategy includes ‘Objective 2c Help protect and enhance Australia’s environment through effective soil management,’ of which a core metric is ensuring land managers are aware of ways to mitigate environmental risks, including fertiliser application.
The Australian Carbon Credit Unit (ACCU) Scheme is managed by the Clean Energy Regulator. This program provides a standardised credit that represents one tonne of CO₂-e either avoided or removed from the atmosphere through eligible emissions reduction or sequestration projects (Clean Energy Regulator, 2024). Avoiding emissions-intensive fertilisers may reduce yields; methods of financial support to minimise input emissions may offset the profit differential for smaller yields.
Global Case Studies
Internationally, nitrogen caps are a common strategy to reduce fertiliser impacts, though implementation has faced compliance challenges. Nitrogen caps are mandated weight limits that growers can not exceed per hectare each year. In the European Union, regions susceptible to nitrogen damage are mandated to use less than 170 kg N/ha/year under the 1991 Nitrates Directive (Council of the European Communities, 1991). Some countries, including the Netherlands, have phased out caps due to farmer protests and compliance issues (Riley, 2022).
In New Zealand, the 2021 National Environmental Standards for Freshwater capped nitrogen (N) at 190 kg N/ha/year for farms over 20 ha (Ministry for the Environment, 2023). Compliance has been limited (61% of dairy farms reporting), and some farmers view the policy as restrictive (Ministry for the Environment, 2023).
These examples illustrate the challenges of balancing environmental protection with farmer acceptance, implementation, and compliance.
Improving Nitrogen Use Efficiency (NUE)
NUE is the ratio between yield and nitrogen input. It is financially and environmentally beneficial for growers to maximise yield while limiting their inputs. Ensuring optimum efficiency requires:
Soil testing: Soil testing improves NUE by enabling tailored application. Yet, testing currently occurs on only 5% of Australian farmland, leaving farmers to make critical decisions without reliable data (DAFF, 2021). Expanding access to soil testing promotes improvement in application decision-making based on actual soil nitrogen levels.
Fertiliser inhibitors: Nitrification and urease inhibitors slow nitrogen breakdown in soils, reducing both emissions and nutrient losses. Trials indicate they can cut emissions by 60–80% under certain conditions and reduce the required application volume (Grace et al., 2020). Uptake remains limited due to higher costs and the absence of financial incentives (Fertiliser Australia, 2023).
Improving access to consistent data, guidance, and technologies is central to supporting sustainable nitrogen management across Australian agriculture.
Policy Options
Option 1: Mandate on-pack environmental risk disclosure
This policy proposes federal mandatory environmental risk labelling. Currently, fertiliser is not included in the Agricultural and Veterinary Chemicals Code Act 1994. Adding fertiliser to the definition of “Agricultural chemical product” would improve labelling quality. This code is managed by the Australian Pesticides and Veterinary Medicines Authority (APVMA), in conjunction with DAFF.
The proposed pack label would include a star rating system, as calculated by a matrix based on emissions from application, nitrogen leaching risk, and manufacturing emissions. This program could incur costs for fertiliser companies to self-report their environmental impact and change current labels, as well as $3 million annually for DAFF to manage compliance and outreach. This cost is equivalent to a national task force of around 15 FTE of APS6 and EL1 to manage compliance and project rollout, as well as a further $1.5 million budget to engage Fertiliser Australia to manage the outreach program, including expansion of their Fertcare education program.
Environmental Risk disclosure will support decision-making on a farm level, which may increase demand for fertiliser innovation in Australia. Conversely, sustainability claims could lead manufacturers to add a premium on more sustainable options, which may dampen demand. This approach relies on individual producers to procure fertiliser more sustainably. As such, extensive investment in community engagement would be required.
Option 2: Mandate that free soil testing kits must be available at all fertiliser points of purchase
This policy proposes that all fertiliser is sold with a free soil test kit. Currently, no national policies encourage soil testing. Introducing this requirement through the National Soil Strategy could improve uptake of testing. Providing free kits would help improve data coverage by reducing costs and enhancing ease of access for land managers. This policy option would be managed by DCCEEW as part of their National Soil Strategy, with the support of ANSIS to collate voluntarily reported soil sample data into their national database.
Kits would be delivered to growers via their fertiliser delivery partners, with an online platform available for voluntary reporting of test results. With 57,300 agricultural businesses applying fertiliser each year, assuming 50% of growers utilise one testing kit each year, at $300 per kit, the total program expenditure is estimated to amount to $8.6 million (Australian Bureau of Statistics, 2018). Funding avenues include the budget allocated to the National Soil Strategy or import taxes from fertiliser companies.
Increased soil testing prevalence supports growers in addressing their specific soil needs. This program will support profitability and sustainability for participating farms, creating additional agronomic jobs to manage testing. The burden of reporting, privacy concerns and voluntary participation may prove challenging for program efficacy.
Option 2: Implement Methodology for Inhibitor usage within Nitrate Vulnerable Zones under the ACCU
To further incentivise smart fertiliser choices, the ACCU could formally recognise the use of fertiliser inhibitors to reduce emissions, specifically nitrification and urease inhibitors. Currently, no approved ACCU methodology allows landholders to earn carbon credits for the use of fertiliser inhibitors, despite their proven potential for reducing emissions (Clean Energy Regulator, 2024).
This policy proposes the development of a new ACCU methodology that quantifies reductions from switching to inhibitors. Producers could register projects and generate ACCUs for verified inhibitor application, creating a new income stream to offset adoption costs.
This method would be implemented in collaboration with the Clean Energy Regulator, DCCEEW, DAFF, and industry bodies such as Fertiliser Australia and Natural Resource Management Groups. The development and pilot would cost $6 million to roll out, given that eight projects were executed or in progress from the $48 million in the 2024-25 budget allocated to reforming methodologies (DCCEEW, 2016).
This option has the potential to reduce both emissions and leaching, assuming moderate producer participation. However, higher upfront costs of inhibitors and the uncertain demand for credits may limit uptake.
Policy Recommendation
Mandating on-pack environmental risk disclosure is the recommended policy option as it balances feasibility, cost, and impact. Improved labelling places and mandatory disclosure will stimulate industry-wide fertiliser innovation for the future. Soil testing kits and ACCU credits may prove laborious for land managers, and program roll-out will be more expensive than labelling changes.
The proposed label would include a QR code, directed to free Fertcare education delivered by Fertiliser Australia, which focuses on how to maximise yield whilst minimising fertiliser input. The education program will focus on applying fertiliser at the right place, time and rate across crop types and climates. Alongside the QR code, the product will also be rated with an environmental risk out of five, similar to the Health Star Rating System. The rating will be based on a risk matrix, taking into account the following key factors:
Nutrient Use Efficiency
Emissions from volatilisation and manufacture
Soil Health Impact
Water Ecosystem Risk
Human Health Risk
Each factor will be weighted by impact level and measured through field research and emissions reporting. Determination of the risk matrix will be finalised in consultation with industry and research partners.
Recommended legislative changes to achieve the label change would include expanding the Schedule of the Agricultural and Veterinary Chemicals Code Act 1994 to add “(f) synthetic agricultural fertilisers for the improvement of yield" under Section 4. Definition of agricultural chemical product. Section 5D Definition of meets the labelling criteria should also be amended to include a mandatory signpost to educational materials (Fertcare) and risk rating based on the industry-aligned risk matrix.
Implementation Timeline
Design (Year 1): Develop the environmental risk rating collaboratively with industry, researchers, and farmer groups through round tables and an open call for feedback.
Legislative Amendment (Year 2): Harmonise state labelling regulations under the Agricultural and Veterinary Chemicals Code Act 1994, enforced by the Australian Pesticides and Veterinary Medicines Authority, which conducts audits and gatekeeps non-compliant products from reaching the market.
Phased Rollout (Years 2-4): Voluntary adoption in Year 2, with all suppliers over $20 million net revenue attributable to fertiliser sales included by Year 3, full compliance enforced by Year 4.
Extension & Training: Expand the Fertcare Program to help farmers interpret labels and integrate into nutrient management practices.
Expenditure
Government
The major costs for the government will be enforcement, outreach and monitoring, which are expected to cost a total of $3 million each year. This funding could be allocated through the National Soil Strategy’s budget.
Industry
The majority of the program cost will be borne by industry, as all companies will need to update labels. This will be a one-time cost outlay and will depend on each company's packaging format mix. Bulk Formatting will include a receipt change where bulk bags may require printed label changes.
On Farm
Fertiliser companies may use risk disclosure to demand higher prices for more sustainable fertilisers. This should be offset for farmers by increased efficiencies from educational uplift attributable to the program.
Evaluation
Within the first three years of the program, success indicators will include compliance rates of fertiliser companies and farmer awareness of the program. By year four, 100% of fertiliser sold in Australia must share environmental risk information on-pack.
In year five, a survey of growers will be conducted to assess changes in fertiliser usage behaviours. ANSIS will also support the evaluation of soil health and water quality in priority areas. This evaluation will identify regions where further outreach is required. Change in fertiliser sales volumes will be captured by the Australian Bureau of Agricultural and Resource Economics.
Barriers and Risks
Implementation of the proposed environmental risk disclosure system faces several potential barriers, most prominently industry resistance. Fertiliser companies may lobby against this policy, as increased reporting and label changes may impact them financially. Furthermore, fertiliser buyers may oppose the change of legislation if fertiliser companies pass on label change costs through unit price to end-users. Extensive industry consultation, a phased implementation approach, and flexible timelines for smaller companies will help minimise cost impacts for suppliers. If the program is successful, this policy may drive increased sales of more sustainable options (i.e. inhibitors), which should offset initial label change and reporting costs.
Implementation risks include farmer uptake and trade challenges. Farmer participation is not guaranteed; labels may be ignored if the methodology is unclear or perceived as irrelevant for specific farm conditions. Extensive consultation and robust education from fertiliser sales personnel are required to improve outreach success.
Furthermore, divergence from international standard fertiliser regulation may make Australia less attractive as an import location. This increased legislative burden may drive trade flows and market prices. To mitigate this risk, DAFF must partner with the United Nations Food and Agriculture Organisation to support sustainable fertiliser framework implementation globally and encourage multilateral innovation for more sustainable fertiliser products.
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The views and opinions expressed by Global Voices Fellows do not necessarily reflect those of the organisation or its staff.
