Cultivation and cropping has led to a substantial loss of soil organic matter (SOM) from the Australian cereal belt; the long-term SOM loss often exceeds 60% from the top 0–0.1 m depth after 50 years of cereal cropping. Loss of labile components of SOM such as sand-size or particulate SOM, microbial biomass, and mineralisable nitrogen has been even higher, thus resulting in greater loss in soil productivity than that assessed from the loss of total SOM alone. Since SOM is heterogeneous in nature, the significance and functions of its various components are ambiguous. It is essential that the relationship between levels of total SOM or its identif iable components and the most affected soil properties be established and then quantif ied before the concentrations or amounts of SOM and/or its components can be used as a performance indicator. There is also a need for experimentally verifiable soil organic C pools in modelling the dynamics and management of SOM. Furthermore, the interaction of environmental pollutants added to soil, soil microbial biodiversity, and SOM is poorly understood and therefore requires further study. Biophysically appropriate and cost-effective management practices for cereal cropping lands are required for restoring and maintaining organic matter for sustainable agriculture and restoration of degraded lands. The additional benefit of SOM restoration will be an increase in the long-term greenhouse C sink, which has the potentialto reduce greenhouse emissions by about 50 Mt CO₂ equivalents/year over a 20-year period, although current improved agricultural practices can only sequester an estimated 23% of the potential soil C sink.