Five key issues re-shaping agriculture contracts in Australia

As Australia moves deeper into 2026, agricultural businesses are navigating one of the most dynamic operating environments seen in years. Volatile input costs, shifting climate conditions, regulatory change and increasingly complex supply chains are putting unprecedented pressure on the contractual frameworks that underpin agribusiness operations.

Working closely with a number of agriculture clients, our Agribusiness team have identified key trends and issues that should prompt producers, processors, exporters and contractors alike to reassess whether their existing agreements provide adequate protections and still reflect commercial reality.

Below are five key issues shaping agricultural contracts in 2025–26, and why now is the time for agribusinesses to update and strengthen their contractual protections.

1.Rising input costs are forcing contract repricing and cost-sharing mechanisms

Recent agricultural outlook data shows that fertiliser, irrigation, chemical and labour costs are continuing to put pressure on margins, with little evidence of slowing down.

Commodity production forecasts may be strong in some sectors, but operating costs remain one of the biggest threats to profitability within the agriculture sector. In our practice, we’ve noticed a growing trend of businesses that are now unable to absorb cost increases, especially when they are locked into fixed‑price or long‑term supply agreements. Luckily, whether you are a supplier or buyer, there are some practical actions you can take.

Contract implications:

If you are a supplier to agriculture businesses, consider:

• Adopting price‑adjustment formulas linked to input indices.
• The use of cost‑sharing clauses, especially in processor–producer supply chains.
• The inclusion of mid‑term price review triggers that allow for renegotiation where market conditions materially shift.

If you are a buyer, consider:

• Negotiating fixed-price pricing mechanisms for the length of your contract.
• The specific allocation of cost responsibility for certain aspects of the supply.
• The inclusion of options to renegotiate, or exit, the contract.

2.Climate variability and seasonal risk

Seasonal and weather‑driven volatility continues to influence agricultural output, particularly in horticulture, where production volumes remain tightly tied to predicted seasonal conditions. With droughts, floods and extreme heat events becoming more frequent, businesses are increasingly recognising the need for detailed and robust provisions that appropriately allocate risk when climatic events interrupt production or supply. A review and strengthening of new and existing contracts can provide peace of mind in times of instability.

Contract implications:

Consider:

• Strengthening force majeure clauses, with clearer triggers and consequences.
• The introduction of specific supply‑interruption, crop‑failure, and alternative‑sourcing clauses.
• Clarification of the parties’ obligations where delivery becomes commercially impracticable.

3.Sustainability, ethical labour and compliance

Following the 2025 federal election, the Albanese Government has doubled down on policy priorities centred on sustainability, ethical labour practices and transparent supply chains. The expansion of the Pacific Australia Labour Mobility (PALM) scheme and stronger focus on fair worker treatment reflect a broader regulatory trend toward labour compliance, particularly in remote and horticultural regions. These developments are materially affecting how agribusinesses manage contracted labour, supply obligations and compliance risk, making it all the more important to seek out advice from advisors who hold industry and multi-jurisdictional expertise across a range of practice areas.

Contract implications:

Consider:

• The inclusion of modern slavery, ethical sourcing, and labour‑compliance warranties.
• The addition of audit rights, reporting obligations, and indemnities relating to worker treatment.
• The inclusion of specific sustainability KPIs in supply agreements.

4.Ag-tech adoption: Data ownership, IP and technology risk

Australian agriculture is rapidly integrating advanced technology, whether it be from drones monitoring livestock to soil sensors optimising water usage.  . These technologies are now central to operations across livestock, cropping and horticulture in an effort to lift efficiency and productivity.  As a result, agribusinesses are entering into more technology‑driven arrangements, which create new legal risks around data control, intellectual property and service availability. Legislation surrounding privacy and data is evolving, with obligations becoming more onerous and complex as the law races to keep up with development, further emphasising the importance of regular contract and policy review.

Contract implications:

Consider:

• Greater need for contracts to address data ownership, usage rights, and privacy / data protection compliance.
• Clearer allocation of technology performance risk, including specifically addressing downtime, warranty and support obligations.
• The appropriate treatment of IP rights, especially where technology collects proprietary on‑farm data.

5.Global market volatility is increasing demand for flexible pricing and supply Terms

Given the high percentage of Australia’s agricultural products that are exported (around 70% according to the latest figures), Australian businesses can sometimes sit at the mercy of shifting global markets, trade conditions and geopolitical pressures. Export demand for beef, crops and wool remains strong, but volatility in global markets and currencies can rapidly erode margins for both producers and processors. Ensuring that your contracts address these key issues can provide options and stability for those producers looking to sell their products overseas.

Contract implications:

Consider:

• The use of market‑linked pricing formulas tied to export benchmarks.
• Flexible supply‑volume ranges to accommodate production fluctuations.
• The introduction of renegotiation triggers linked to major market movement, currency shifts or logistics interruptions.

What this means for Agribusinesses: Review your contracts!

And now for the most important question of all: When was the last time you reviewed your agriculture contracts?

A proactive contract review can help agribusinesses:

• avoid absorbing cost increases you can’t control,
• reduce exposure to weather‑related supply failures,
• comply with labour and sustainability regulations,
• protect valuable operational and data assets, and
• maintain pricing flexibility in volatile export markets.

Whether it’s grower supply agreements, processing contracts, ag‑tech service agreements, contractor arrangements or export supply contracts, each should be assessed to ensure it reflects 2026 market conditions and maximise protections for your business.

Macpherson Kelley’s Agribusiness industry group offer breadth and depth of experience when it comes to providing practical, no-nonsense advice across a wide range of practice areas. With lawyers practising across commercial, migration and sustainability, our experienced team can assist with creating a contracting framework or preparing new agreements that reflect current trends, employment and migration advice (particularly in regards to agri-specific topics such as modern slavery and the PALM scheme), as well as sustainability reporting.

Contact our team of lawyers for good thinking and industry insight.

The information contained in this article is general in nature and cannot be relied on as legal advice nor does it create an engagement. Please contact one of our lawyers listed above for advice about your specific situation.