The conflict in Iran is usually discussed as an energy crisis. For Australia’s meat and poultry sector, that’s only part of the story. The challenge is broader, touching feed, fertiliser, logistics, packaging, and demand patterns all at once.
Energy shock increases costs across the value chain
With oil flows through the Strait of Hormuz disrupted, fuel and energy prices have jumped sharply. Diesel costs in Australia climbed fast, and some operators reported shortages. Global manufacturing and transport costs are rising in parallel, although the effects are not fully passed on or understood just yet.
For meat and poultry producers, that means:
- Higher livestock transport costs at every stage
- More expensive processing through higher spend on energy for chilling and freezing operations
- Plastic packaging costs rising due to oil prices
Feed costs & fertiliser disruption puts further pressure on margins
The more lasting impact is on fertiliser and feed. The conflict has disrupted fertiliser supply from a region that plays a major role in global production. At the same time, fertiliser prices are up – five of the eight major fertilizers had considerable price increases compared to prior month of 5% or more in March 2026, with projections of 15-20% increase in first half of 2026 year on year. Grain markets will be tightening as input costs rise and producers ration fertilizer
For meat and poultry producers, this translates to:
- Higher feed bills
- Less predictable feed availability
Poultry operators, who rely heavily on feed conversion efficiency, will feel this most acutely.
Supply chains face reliability issues
Shipping routes are being disrupted around the Gulf, adding time and cost. Freight delays are now common, while inputs across food, chemicals, and packaging are taking longer to arrive.
For exporters, this means:
- Delivery timelines are harder to guarantee
- More capital gets tied up in inventory
- Processing can stall if key inputs don’t arrive on time
For Australian exporters serving Asia and the Middle East, reliability becomes a real competitive risk.
Demand volatility increases from domestic and international markets
Demand is moving in two directions at once. Downward pressures from inflation squeezing consumers domestically but also in highly affected export regions such as the Middle East. However, opportunity for competitive plays exist as competitors from Brazil and other export markets are forced to deal with the same operational and cost pressures and may walk away from non-core markets.
For Australian producers, that means short‑term openings around replacing imported goods with domestic or challenging for space in international markets – but only if the operation is in order and can offer a long-term sustainable price to cost equation.
Action plan for the industry
Producers need to shift from pure efficiency to resilience and margin protection. Key priorities for the leaders are:
- Disciplined cost management.
Accelerate cost management initiatives across E2E operation to reduce waste and preserve margin. Review current feed and input hedging, exploring alternative fed formulations in addition to forward contracts.
- Supply chain resilience.
Derisk inbound and outbound service through frequent and transparent communication with logistics partners, in addition to investing in contingency measures to maintain service levels (e.g. buffer stock of critical inputs, securing alternative fuel sources, alternatives for critical spare parts and capital equipment).
- Pricing & customer service discipline.
Gain clarity on when and where to move on price while ensuring supply and service of high margin products and customers. This lever would typically be the top priority; however, the current cost-of-living pressure means retailers themselves are under pressure to keep prices down. Focus on servicing most profitable customer and cut mix, while making those long-delayed decisions on cutting the unprofitable ‘tail’, especially where capacity constraints exist.
The Iran conflict isn’t a passing disruption. It’s a stress test for global food supply chains. For Australia’s meat and poultry industry, the threat isn’t limited to higher costs and will be a combination of margin pressure, service instability, and operational vulnerability. The producers who come out ahead won’t be the lowest‑cost operators. They’ll be the ones who can stay steady while everything around them becomes more volatile.
Learn more about our work in the food industry and how we help producers navigate cost pressure, supply chain disruption, and margin volatility in increasingly uncertain markets, here.
Share:
Pavel Duzhnikov
Associate Partner, Australia
