The case for agricultural R&D has never been stronger

If you're in farming, you're already across what's happening to fertiliser prices as the war in Iran continues. 

With the Strait of Hormuz situation tightening supply, the ag sector has been understandably concerned heading into the winter planting season. 

It is a moment that demands a response, but there’s a solution that often gets overlooked: research and development (R&D). Australia has one of the most productive and efficient farming systems in the world, but so long as critical inputs are tied to a handful of maritime chokepoints, we are exposed.

The numbers tell the story:

• More than 50% of agricultural land uses nitrogen-based fertiliser.
• We import 100% of our potassium and over 90% of our urea.
• Over 60% of our urea imports originate from the UAE, Qatar, Saudi Arabia, and Oman — the region directly disrupted by the Hormuz blockade.
• Recent moves by China to temporarily ban phosphate and urea exports have added further pressure to already strained import patterns.

Supply chain diversification and strategic reserves help at the margins, but what genuinely shifts the underlying exposure is reducing how much fertiliser our farming system needs in the first place. That is where R&D earns its keep.

The good news is that the research is already underway. Work on nitrogen use efficiency is advancing across several fronts: genome-edited crop varieties with superior nitrogen uptake, microbial biofertilisers that fix atmospheric nitrogen, and enhanced-efficiency fertilisers with controlled-release mechanisms. Precision agriculture tools, including variable-rate application systems and sensor-based nitrogen management, are already demonstrating fertiliser reductions of 4–7% without yield penalties. GRDC also has active investments in sub-paddock scale nitrogen management and phosphorus use efficiency.

These advances are not theoretical. They are being trialled and, in many cases, adopted across Australian farming systems. Over time, they reduce input reliance while maintaining yields, improving soil health, and strengthening resilience to global shocks. This is what a more self-reliant, future-focused agricultural system looks like in practice.

For agribusinesses investing in innovation, the R&D Tax Incentive (RDTI) can provide an additional tax benefit above the company tax rate of between 8.5% and 18.5% of eligible R&D expenditure, depending on turnover. For smaller businesses operating at a loss, this can translate into a cash refund of up to 43.5% or 48.5% of eligible R&D spend.

There is also growing momentum to strengthen Australia’s broader innovation system. Recent policy discussions have highlighted opportunities to expand support for mid-sized businesses and encourage greater collaboration between industry and research institutions. While settings may evolve, the direction is clear: enabling more businesses to invest in innovation will be key to long-term productivity.

Australian agriculture has shown that it can adapt to droughts, floods, shifting markets, and biosecurity pressures. R&D investment turns that capacity into a durable capability — one that reduces reliance on volatile global inputs while maintaining productivity and competitiveness. 

To understand what your business may be eligible to claim, reach out to RSM's agribusiness R&D tax team.

This article was first published on ACM Farm Weekly.