The conflict in Iran is disrupting fertiliser production and exports in the Middle East, tightening global supplies and raising fears of higher food prices, industry executives and analysts have warned. The Middle East is one of the world’s largest fertiliser producers, while the Strait of Hormuz is a crucial shipping route for exports.
About 35 per cent of global urea exports pass through the waterway, according to CRU data. Urea is the most widely used nitrogen fertiliser, which in turn underpins around half of global food production. The route also handles 45 per cent of global sulphur exports, a key ingredient used to produce phosphate fertilisers, as well as significant volumes of ammonia, a key ingredient for nitrogen fertilisers.
“We shouldn’t underestimate what this potentially could mean for global food production,” said Svein Tore Holsether, chief executive of Europe’s largest fertiliser group Yara. He added that the focus on oil and gas was “overshadowing” the impact on the fertiliser industry. “If you’re not getting [fertiliser] into the field of the farmers, yields could go down by up to 50 per cent in the first harvest,” he said.
If the disruption continues, consumers could see higher prices for bread within six to 10 weeks, eggs within a few months and pork and broiler chicken within six months, estimates Raj Patel, food system expert at the Lyndon B. Johnson School of Public Affairs.
Chet Edinger had already bought most of the fertilizer for his corn and soybean farm last year, but on Monday morning, with war breaking out in the Middle East, he rushed to secure a last few truckloads of urea for the tens of thousands of acres he cultivates near Mitchell, South Dakota.
“We grabbed what we needed,” he said by phone. It cost 22% more than late last year — “the highest price I ever had to pay.”
The US and Israel’s attacks on Iran, and Tehran’s retaliation across the Middle East, have disrupted supplies of fertilizer, and farmers worldwide are rushing to secure critical nutrients. Around a third of global fertilizer supply passes through the Strait of Hormuz, a nautical passage between the Persian Gulf and the Arabian Sea, which Iran has promised to shut to shipping. Prices of natural gas — a crucial element in fertilizer production — are soaring globally.
The conflict has come at a sensitive moment for global agriculture. The cost of fertilizers is already high. Farmers in the northern hemisphere are about to begin fertilizing their fields, while winter-crop planting is approaching in the southern hemisphere.
The disruption is particularly frustrating for farmers in the US, who have been suffering for years from low crop prices and high input costs, as well as trade volatility since President Donald Trump took office.
“I don’t want to say it’s catastrophic, but it could not come at a worse time,” said Bloomberg Intelligence analyst Alexis Maxwell. “Escalating attacks in the Middle East are creating a global chokepoint for farmers.”
If the disruption continues, it could add to inflationary pressures, just as the world is slowly recovering from a period of prolonged rising food prices caused by the Covid-19 pandemic, the war in Ukraine and extreme weather shocks.