Climate risk is changing the business of farming
Bendigo Bank Agribusiness’ Planning for Change – Climate Report 2026 highlights a reality many Australian farmers are already living: climate risk is no longer a future issue or a distant environmental concern. It is actively shaping productivity, profitability, insurance, feed and water availability, market access and long-term farm decision-making.
The report states that the Australian agricultural sector is confronting escalating impacts from climate change, with tangible threats to both productivity and profitability. It also points to the compounding nature of recent events, from floods across Queensland, New South Wales and Victoria to drought in the southeast and destructive Victorian bushfires in January 2026.
One of the report’s most significant findings is that climate changes to seasonal conditions contributed to a 23% decrease in average annual farm profit between 2001 and 2020. It also notes that the risk of very low farm returns due to climate variability has doubled since 2000.
For farming businesses, this matters because climate pressure is not only felt in the season it occurs. A difficult year can reduce reserves, increase debt, delay repairs and leave less capacity to respond to the next event. When difficult seasons become more frequent or unpredictable, farmers are forced to make business decisions in an environment where the risk profile has changed.
The report also highlights the effect of climate variability on feed, water and livestock management. It notes that producers are already facing heat stress in livestock, disruptions to crop yield and quality, and limited feed and water availability in some years.
These pressures directly affect how farms operate. Limited pasture growth can increase reliance on purchased feed. Reduced water availability can increase operating costs. Heat stress can affect livestock welfare, productivity and reproductive performance. For many farmers, these are not abstract risks — they are practical, financial and daily management challenges.
Insurance is another growing pressure. Bendigo Bank Agribusiness notes that agricultural profitability is being affected by additional costs associated with mitigating climate risk, particularly insurance, with some regions becoming increasingly unaffordable to insure due to rising premiums.
This is an important shift. It means the cost of farming is not only rising through inputs such as feed, fuel and fertiliser. Risk itself is becoming more expensive.
At the same time, farmers are also navigating changing market expectations. The report notes that the broader trade environment is becoming more complex, with non-tariff measures increasing rapidly over the past decade, many related to sustainability. It also highlights growing sustainability reporting expectations from large international corporations.
For farmers, this creates a difficult balance. They are being asked to manage more volatility on farm while also responding to changing expectations from markets, governments, consumers and supply chains.
This is where early, practical support becomes essential.
As pressure increases, options need to increase too. Farmers should not have to wait until they are in crisis before they can understand what pathways may be available to them.
Farm Transitions Australia supports farmers to explore those options with practical information, resources and connections. This may include helping farmers understand potential transition pathways, connecting them with relevant experts and consultants, identifying funding or grant opportunities, and supporting the early planning needed to assess what may be viable for their land, business and future.
The aim is not to push farmers toward one decision. Every farm, every family and every person’s circumstances are different. The aim is to ensure farmers have access to the right information, the right support and the right people before pressure becomes crisis.
Because as the business of farming changes, farmers need more than pressure to adapt. They need practical pathways, clear information and support to make decisions with confidence.
