Managing higher fuel costs on-farm

Protect your profitability by staying disciplined with the core drivers of your business. Look for practical efficiencies within your system. When expenses are climbing, consistent cost reductions across the farm help buffer pressure on operating margins.

Farm system impacts

Impacts will vary regionally and by farm system. Different farming systems will feel the effects of rising costs differently. It’s important to understand the cost impacts for your farm system right now, and how prolonged higher fuel costs could influence decisions over the coming season and longer term.

Fuel price impacts may be immediate and medium-term. Higher fuel prices can affect farm input costs now and for up to two years, depending on how long international pressures continue. Other costs may also rise indirectly where manufacturing, logistics, or freight make up part of the final product or service price. Primary inputs directly impacted include:

• Fuel, Fertiliser, Feed, and Freight.

Prioritise fuel, machinery and contractor spending

Fuel costs add up fast. Ensure every trip and every hour of contractor time delivers value. Prioritise spending where it directly protects or grows feed supply, such as pasture establishment, essential fertiliser and weed control.

Delay or minimise lower-return jobs where possible and combine jobs and reduce unnecessary trips to town. Adopt your driving habits to make your fuel go further. Find out more on the EECA website.

Coordinate contractor timing for efficiency. Explore shared contractor passes with neighbours if appropriate. Consider one pass or reduced-pass cultivation where practical. Organise tasks to reduce machinery movements, idling time and review machinery operating practices.

Understand financial implications for this and next season

Rising fuel and input costs can squeeze margins and cashflow, with an increase to farm working expenses. Planning now can help to protect next year’s profit margin.

Reforecast April–May 2026 so any fuel, freight, fertiliser or feed cost increases show up quickly. Identify winter and early spring cashflow pressure points, this is when higher costs collide with lower milk income. Have early conversations with your bank, accountant, or advisor. Early visibility equals better options.

Identify where your farming business is most exposed and consider what options are available that won’t hurt next seasons performance. Look closely at the “4 F’s”:

• Fuel
• Fertiliser
• Feed
• Freight

Build next season’s budget

Create your 26/27 budget using several cost scenarios (e.g. +10%, +20%, +30%). This helps you understand your breakeven milk price, operating margin and cash flow resistance. Include:

• Fuel and freight increases.
• Fertiliser and supplement price shifts.
• Contractor rates.

What costs can be deferred? Some examples include non-essential repairs, non-urgent infrastructure upgrades and some fertiliser applications (where this won’t compromise feed supply).

Potential farm system changes

If high fuel and feed prices continue, it may be worth discussing with a rural professional whether tweaks to your farm system could:

• Lower reliance on brought-in feed.
• Reduce cultivation or machinery use.
• Improve pasture utilisation.
• Shift to lower input strategies in high-cost years.

Communicate with your farm team

Make sure your team understands the situation and has a chance to contribute ideas.

Share what you know and outline any changes to routines. Encourage team-generated efficiency suggestions. Reinforce health and safety - especially if reducing machinery use increases foot traffic or changes workflows. Well-maintained equipment is more efficient.

Animal welfare and environmental performance remain non-negotiable

Good welfare and environmental practices protect your farm, your people, and your business. There must be no compromise on:

• Stock feeding and wellbeing.
• Effluent management.
• Environmental compliance.

Farm security: protecting fuel and essential inputs

Higher fuel prices and tighter supply can increase the risk of on-farm fuel theft. Taking simple, practical steps can help protect fuel, reduce losses, and support business continuity during periods of volatility. These measures don’t need to be complex - small, proactive steps can significantly reduce risk, especially while fuel prices remain elevated.

Secure fuel storage

• Ensure fuel tanks are locked, including valves, taps, and access points.
• Where possible, locate tanks closer to sheds or dwellings rather than in isolated areas.
• Use anti-siphon devices or locking caps on tanks and mobile equipment.
• If possible, restrict vehicle access to fuel storage areas where practical.
• Regularly check fuel levels and investigate unexplained drops promptly.

Lighting and visibility

• Install sensor or security lighting around fuel tanks, yards, and access ways.
• Keep areas around tanks tidy and visible to reduce easy access for vehicles at night.
• Visible deterrents such as lighting and signage can discourage opportunistic theft.

Monitoring and alerts

• Consider fuel level monitoring technology or alarms that alert you to unusual withdrawals or use outside normal operating hours.
• Set alerts to flag late-night fuel use when staff or contractors wouldn’t normally be on farm.

People and processes

• Ensure staff and contractors understand expectations around fuel access and use.
• Keep keys secure and limit access to fuel storage.
• If theft is suspected, record details and contact the police.

Record keeping and visibility

• Keep records of fuel deliveries and typical daily or weekly usage.
• Regular checks during high-use periods help identify unusual losses early.

Stay connected

• Talk with neighbours and local rural networks about suspicious activity.
• Staying connected helps increase awareness and supports quicker responses if issues arise.

These measures don’t need to be complex - small, proactive steps can significantly reduce risk, especially while fuel prices remain elevated.