By Zac de Silva in Canberra

Australian farmers are being promised more fertiliser imports under a deal struck between the federal government and two major companies, aimed at securing supplies in response to a global bottleneck.

The federal government has reached an agreement with chemical companies CSBP and Incitec Pivot, to underwrite the financial risk importing fertiliser from overseas.

The deal was struck using the government’s strategic reserve powers – designed to shore up supplies of crude oil, fuel and fertiliser, which have been impacted by the closure of the Strait of Hormuz.

Much of the world’s fertiliser usually travels through the key waterway, and the Iran war has sent prices for the crucial agricultural commodity soaring.

Under the new agreement, government funds will effectively be put up as insurance for importers who are facing rapid, volatile price changes because of the war.

The scheme is designed to give companies confidence to buy the supplies they need, even if prices drop shortly after.

Agriculture Minister Julie Collins hailed the fertiliser deals as a significant outcome which will help farmers better manage the upcoming growing season, supporting the nation’s food production.

“We understand how critical fertiliser is for Australian farmers, for our food production system and the food security of our region,” she said in a statement.

Similar deals have been struck with five fuel companies – BP, Viva, Ampol, iOR and Park Fuels – allowing them to buy additional petrol and diesel for the Australian market.