The federal government helped broker the deal between companies, Incitec Pivot Fertilisers and PT Pupuk Indonesia, amid a major trade tour in the region headed by Prime Minister Anthony Albanese.
Mr Albanese said the deal demonstrates the critical importance of strong relationships with Australia's regional partners.
"We understand how critical fertiliser is for Australian farmers, for our food production system and the food security of our region," he said.
Sixty per cent of the supply of urea to Australia for fertiliser travels through the Strait of Hormuz, which has remained closed since US-Israeli strikes launched on Iran in February.Â
Agriculture Minister Julie Collins said she has been working around the clock with industry to support fertiliser getting to Australian farmers.
"This guarantees supply of fertiliser to Australian farmers at this critical time," she said.
"While this is a commercial deal, the Australian and Indonesian governments have been working to support this positive outcome."
Australia plays a major role supporting food security in Indonesia, Australia's fourth largest export market for agriculture, fisheries and forestry exports, worth more than $4.7 billion in 2025.
Incitec Pivot President Scott Bowman said while there is more work to do to ensure farmers requirements can be fully met for the upcoming season, the additional volume will go a long way to shoring up supplies.
"This additional volume for the period May to December, at prevailing market prices, is another critical plank in servicing the needs of Australian farmers," he said.
Mr Albanese cut his trade tour short on Thursday while in Malaysia, heading straight back to Geelong following a major fire at one of the country's two fuel refineries.
While the fire only damaged part of the facility, there are fears it could lead to fuel shortages, particularly in parts of Victoria.
Earlier he announced Australia had secured 100 million litres of additional diesel from Brunei and South Korea using new strategic reserve powers.
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