El Niño Threatens Australian Agriculture and Economy
Climate models now confidently project a very strong El Niño weather event for 2026, bringing hotter and drier conditions to Australia for the rest of the year and into 2027. This Pacific Ocean phenomenon increases the likelihood of drought in eastern and southern Australia, directly impacting local economies and creating social ripple effects across affected communities. Indirectly, El Niño can affect all Australians through its influence on food production and prices, though headlines warning of shortages or soaring prices often do not reflect real, observable changes.
Regional Disparities in Drought Resilience
Weather-dependent agricultural regions are typically hit first during an El Niño. Farmers in parts of Victoria, southern New South Wales, and South Australia have experienced unusually wet and warm conditions, supporting a strong start to the season for many crops. However, this does not guarantee that drought conditions will not develop later. In other areas, such as parts of northern NSW and southern Queensland, dry conditions persist. Not all regions cope equally with drought; some show strong economic resilience, while others recover slowly. Between 2017 and 2020, severe drought in NSW affected the Hunter Valley particularly severely, with agricultural employment 75% lower by 2020 compared to estimates without drought, and only slow signs of recovery years later. In contrast, the Riverina region recovered much faster, partly due to better irrigation infrastructure, diversified production systems, and better market access.
Hidden Social and Mental Health Toll
Beyond economic impacts, drought takes a hidden toll on stress and mental health in rural communities. Previous research has found that periods of drought are linked to higher rates of suicide in affected communities. This year, farmers already face higher fuel and fertiliser costs due to the war in the Middle East, leaving some regional communities especially vulnerable to further economic impacts from drought.
Complex Impact on Food Prices
El Niño could also affect consumers if lower production leads to higher food prices, exacerbating cost-of-living pressures. However, predicting which foods will be affected and by how much is nuanced and often very hard. For commodities like wheat and barley, which Australia exports, prices depend on global markets. Evidence from previous El Niño years suggests that globally, food and agricultural commodity prices are not affected substantially. For example, El Niño typically lowers Australian wheat production, but global wheat prices are more likely to fall because El Niño may bring favourable weather to other wheat-exporting countries like Argentina and parts of the United States.
Better Preparedness and Resilience
Australia cannot prevent El Niño, but it can reduce its consequences by improving resilience before drought conditions become severe. A top priority is better monitoring of drought impacts beyond rainfall and agricultural production, especially in the short term. Beyond efforts from the Australian Bureau of Statistics to modernise agricultural production data, better data on regional economic activity, food insecurity, health outcomes, and mental well-being could help governments identify vulnerable communities earlier and target support more effectively. Ongoing research explores data from the Pharmaceutical Benefits Scheme to detect early signs of community distress, which could prove a useful tool to intervene before mental health pressures translate into more serious outcomes.
Spending on adaptation and resilience—such as water security, irrigation infrastructure, climate information services, and early warning systems—should be viewed as an economic investment rather than a cost. Australia is unlikely to face broad-scale food shortages soon, but the greater challenge is ensuring all Australians can access and afford nutritious food during climatic and economic stress, and that farmers and communities are better prepared. Strengthening the resilience of the food system and supporting vulnerable households should be central to any long-term response.
