Trends and Factors Affecting Consumption of Fertilizer in Australia: The Moderating Role of Agri R&D Investment

The Australian agriculture sector currently relies on imported fertilizers, which poses risks to price stability and increases the potential for supply chain disruptions. This study aims to investigate the trends and factors affecting fertilizer consumption in Australia, considering the moderating effects of agricultural GDP and agri R&D expenditure. The econometric models, including ARDL bound tests, Granger causality tests, and FMOLS, were used to analyze quarterly data from 2000 to 2023. The findings confirm that a significant long-run relationship exists among the variables of crop production, agricultural export–import ratio, and agricultural R&D expenditure. The moderating effects of agricultural GDP and agricultural R&D expenditure on fertilizer consumption were also found to be significant. The Granger causality test results indicate that bidirectional causality exists between agricultural GDP and fertilizer consumption, arable land and fertilizer consumption, employment and fertilizer consumption, and the export–import ratio and fertilizer consumption. The findings from the robustness checks confirm that most of the variables are co-integrated with fertilizer consumption, except agri GDP and employment. Thus, policymakers are advised to prioritize investment in agricultural R&D to promote sustainable fertilizer consumption and enhance agricultural value addition in Australia.