Australia’s rapid expansion of data centres is increasingly encroaching on some of the nation’s most productive farmland, raising concerns about the potential long-term costs to domestic food production and land use. An analysis by agritech firm Digital Agriculture Services (DAS) identified approximately $21 billion worth of prime agricultural land across New South Wales (NSW) and Victoria situated within zones attractive for data centre development.
The regional surge in data centre construction comes amid mounting resistance to such facilities in urban areas, with commercial real estate firm JLL reporting record levels of public objections. Of the more than 314 data centres operating nationwide, 278 are located in regional areas, and the number is expected to rise sharply, following a pattern similar to the United States where rural developments have sparked protests and regulatory pauses.
DAS co-founder Sarah Gorman, while supportive of data centre growth, warns that the pace of development demands a more deliberate approach to avoid compromising food production capabilities. She highlights that the identified regions—spanning roughly 2.1 million hectares across around 21,000 farms—include some of the country’s most productive broadacre cropping and pasture-based grazing land.
“We need to understand the trade-off we’re making in real time,” Gorman said, emphasizing the risks posed by shrinking agricultural land amid already strained global supply chains and volatile input costs, including fuel and fertiliser. She describes data centre expansion as the latest challenge confronting Australian farmland, following earlier pressures linked to ownership debates and climate-related impacts such as drought.
The analysis details significant land transactions in areas aligned with renewable energy zones (REZ), which attract developers due to their access to sustainable power. In NSW’s North West region, associated with the New England REZ, farmland transactions totaled nearly $1 billion across more than 700,000 hectares in 2025. Central West NSW saw $817.9 million exchanged over 785,000 hectares, while the Riverina region recorded $627.1 million for roughly 575,000 hectares. Victorian regions show lower, yet notable activity, with the Hume area seeing $292.3 million over 15,000 hectares, and Melton marking earlier stages of land conversion.
Meanwhile, the federal government projects that the artificial intelligence sector, underpinned by data centre infrastructure, will contribute an additional $600 billion to Australia’s economy by 2030. Industry leaders, including Microsoft CEO Satya Nadella and OpenAI’s Sam Altman, have signaled the country’s potential as a global data centre hub.
However, tensions around land use are growing. JLL’s national director for data centres, Matthew Lee, acknowledged significant public opposition, citing cancelled deals linked to the negative sentiment. Federal Industry Minister Tim Ayres has also cautioned that the current investment rush risks reproducing past resource boom pitfalls, such as labour shortages and social strain.
Gorman draws parallels to historic debates over foreign ownership of farmland, suggesting the nation faces a pivotal moment in determining the future stewardship of its prime agricultural land. “What do we want for the sovereign asset that is our prime agricultural land?” she questioned, underscoring the need for careful policy consideration as data centre development accelerates into rural Australia.