Key points
- Around 30% of global nitrogen fertiliser exports and 20% of liquefied natural gas (LNG) transit through the Strait of Hormuz, access to which has been almost completely cut off following attacks on Iran in late February.
- This comes at a time of already elevated fertiliser prices, when demand is highest during planting seasons. The disruption has caused market shocks, with urea prices rising to levels not seen since the 2022 invasion of Ukraine.
- As the Middle East supplies four times as much global urea as Russia, instability in the region could trigger even larger fertiliser shocks.
- Elevated fertiliser prices may result in higher food costs, as seen in 2022. Palm oil, soybean oil, soy, corn and wheat prices have surged, while “food-at-home” inflation in the US could increase by roughly 2 percentage points on top of a sustained stretch of higher prices for food, housing and energy for US consumers.
- Low- and middle-income countries – many of which are already facing high levels of food insecurity – may be hit hardest by the impacts of high fertiliser prices, as farmers have less capacity to absorb these costs.
- Improving fertiliser management and adopting agroecological practices can significantly reduce dependence on synthetic fertilisers while maintaining or increasing yields.
- These practices can cut nitrogen pollution by 30–70%, reduce fertiliser use, increase yields by up to 30%, and generate up to USD 600 billion in societal benefits through improved food supply, human health, ecosystems and climate outcomes.
Fertiliser supply disruptions are driving up prices and raising concerns about a looming food price crisis
Almost half the world’s population is dependent on food grown using synthetic nitrogen fertilisers. These industrially produced nutrients supply crops with nitrogen, a key nutrient for plant growth. About a third of the world’s fertiliser exports pass through the Strait of Hormuz between the Persian Gulf and the Gulf of Oman.
Vessel traffic has come to a near halt at this passage following attacks on Iran in late February, having been reduced by 97% in the first week of March. Unlike oil, which countries maintain a reserve of, fertiliser markets lack a stockpile to buffer prolonged disruption and therefore rely on continuous production and trade.
In 2024, 34% of global urea trade and 23% of global ammonia trade passed through the Strait of Hormuz from five major fertiliser exporting countries – Iran, Qatar, Saudi Arabia, the UAE and Bahrain, according to the International Fertilizer Association (IFA). Adding exports from neighbouring countries Egypt, Oman and Jordan brings the total global urea trade originating in the Middle East to almost 50%. Including phosphate and potash, the wider Middle East region accounts for almost 30% of global exports of fertilisers.
Global fertiliser supplies are affected not only by disruptions to the fertiliser trade itself, but also by the supply of liquefied natural gas (LNG), which is required in large amounts to produce ammonia. This is the main component of nitrogen fertilisers, and can be converted into urea – the most common nitrogen fertiliser.
Approximately 20% of the world’s global LNG supply is transported through the Strait of Hormuz. While some supply could be partially offset by other LNG-producing countries, a one-year closure of the strait would result in a 15% decline in global LNG supply relative to 2024 levels, according to the Oxford Institute for Energy Studies.
Fertiliser shocks contribute to food-energy-geopolitics polycrisis
Markets are already responding to supply disruptions, with rising costs of nitrogen fertilisers such as urea and ammonia causing concern among farmers as the spring planting season in the northern hemisphere – when fertiliser demand is highest – approaches.
According to Bloomberg Green Markets, the price of urea in the US rose to the highest levels since October 2022 – in the wake of the invasion of Ukraine – following the attacks. Within 48 hours of the attack, urea prices surged by 20% in North Africa. Prices in Southeast Asia are reported to have risen by more than 40% following outages at a major Qatari LNG facility, struck by Iran, that supplies feedstock for fertiliser production. Fertiliser manufacturers in India and Pakistan are reportedly cutting production as a result of suspended LNG supplies from Qatar, while Europe’s largest fertiliser producer has reduced ammonia output to 85% of full capacity as gas feedstock prices have soared more than 50% in Europe since the conflict started.
Fertiliser market is still feeling the aftershocks of the last supply crisis
This is happening on top of already-elevated fertiliser prices and tight supplies. Trade disruptions following the invasion of Ukraine caused fertiliser prices to spike to USD 815 per tonne in April 2022, more than four times the price of just over USD 200 per tonne in 2020. Although prices have since fallen, they have remained persistently high: urea prices in 2025 were still 50% higher than they were in 2020, illustrating how shocks to fertiliser markets can have long-lasting effects. As the Middle East supplies almost four times the global urea that Russia does, instability in the region has the potential to trigger even larger fertiliser shocks than those seen after the invasion of Ukraine.
Between 2021 and 2022, elevated fertiliser prices caused global fertiliser trade to contract by approximately 12%. Between February and March 2022, the FAO food price index jumped 12.6%, remaining high for months before slowly lowering. If the war in Iran continues, it could aggravate inflationary pressures and affect the output of key crops needed to ensure food security (see figure 1).
Even if the Strait of Hormuz opens soon, it could take weeks for fertiliser shipments to resume and for producers to restart operations – likely too late for Northern Hemisphere spring planting. A lag of six to nine months between planting and harvest means the effects of reduced fertiliser availability could feed through to food prices by the end of the year.
Figure 1
Impact on prices of consumer goods is likely to be felt immediately and globally
Research shows that fertiliser supply shocks quickly translate into higher food prices, as agricultural and food producers pass rising input costs through to consumers. Already in the second week of March this year, palm oil, soybean oil, soy, corn and wheat prices surged as disruptions to crude oil supplies heightened interest in crop-based biofuels (Figure 1), while panic around wartime food security may have prompted some countries to stockpile staples such as wheat.
In addition to the direct food security impacts the conflict is having for people in the Middle East, the World Food Programme warns that ongoing disruptions and rising oil prices can push global food prices higher. Analysts estimate that “food-at-home” inflation in the US could increase by roughly 2 percentage points due to the disruption, which comes on top of a sustained stretch of higher prices for food, housing and energy for US consumers.
Low and middle-income countries are especially vulnerable to fertiliser supply constraints
Fertiliser exported from the Middle East supplies many countries, with India, the US, Australia and Brazil reliant on the largest quantities of ammonia from the region. Alongside these major markets, a number of low-income countries, including Mozambique, Sudan, Somalia and Tanzania, import a substantial portion of their fertiliser through the Persian Gulf and are therefore particularly exposed to supply reductions. Over half of Sudan’s fertiliser is supplied through the Gulf, for example.
Responses to fertiliser supply disruptions following Russia’s invasion of Ukraine may prove instructive as to what to expect today. While the global decline in fertiliser consumption for 2022 was estimated at 5% by the International Fertilizer Association, the International Fertilizer Development Centre estimates that in sub-Saharan Africa (excluding South Africa), consumption may have declined by as much as 25%.
In 2022 many commercial farmers in high-income and major grain-producing countries were able to absorb the higher costs, given expectations of high crop prices at the time, reducing the impact on consumers. Some countries – such as Brazil and Morocco – were able to offset the disruption to fertiliser trade by securing supplies from alternative sources.
Costs fall on farmers, governments and ultimately consumers in low-income countries
By contrast, many lower-income countries rely heavily on imports but lack the fiscal capacity or bargaining power to cushion farmers from rising costs. Spikes in fertiliser prices created significant fiscal pressures in these markets and required governments to fund subsidies for farmers.
India doubled fertiliser subsidies between its 2021-2022 and 2022-2023 budgets, providing Rs. 2.15 trillion (USD 23 billion) in support. In Kenya, some USD 30 million was spent to support the 2022 season. With the largest reliance on fertiliser imports of any region, Latin America was particularly at risk, prompting countries like Colombia to provide a 100% fertiliser subsidy for food production, exacerbating existing pressures on spending.
In many of these instances, high costs made the ongoing purchase and use of fertilisers unsustainable. Evidence from the 2022 disruption suggests many smallholder farmers in sub-Saharan Africa reduced their use of inorganic fertilisers due to higher input costs. During the 2022-2023 period, up to 70% of smallholder farmers in Malawi and more than 45% in Burkina Faso, Ethiopia, Nigeria and Tanzania reduced their purchases of fertiliser, citing cost as the main factor, likely leading to yield reductions, according to a World Bank report.
The impacts have been significant. African economies were still grappling with price shocks, trade disruptions, and rising debt pressures three years after the invasion of Ukraine, particularly in countries with limited financial buffers. Although the initial spikes in food, fuel and fertiliser prices had eased by 2025, many remain elevated compared with pre-pandemic levels, prolonging inflation and economic strain across the continent.
Food production and security are ultimately at risk
While lower-income countries reportedly reduced fertiliser application due to cost pressures, higher-income producers were also affected and implemented adaptation measures to mitigate rising costs. While there was little reduction in fertiliser use in the US following price spikes in 2022, farmer surveys found that 78% of farmers utilised adaptation practices to reduce reliance on fertilisers, citing cost as a key reason.
In the face of today’s challenges, farmers are looking again for alternative solutions, and are landing on changes that could affect food security. In the US, which has a relatively greater buffer against global impacts than other countries, farmers are already considering reducing the amount of corn planted in favour of crops like soybeans, which need less fertiliser, to reduce their exposure to price volatility. Shifts in planting decisions like these could alter the supply of key crops and contribute to higher prices or tighter availability in global food markets.
In addition to fertiliser costs, higher energy and transport costs, including oil freight rates and insurance premiums, as a direct consequence of the war and closure of the Strait of Hormuz could put further pressure on food costs and the price of living, particularly for lower-income countries.
At a time when margins are already tight for farmers due to rising operational costs and declining commodity prices, the current cost challenges may have worldwide impacts on food production and security.
Reducing reliance on synthetic fertilisers offers multiple economic advantages
The disruption to fertiliser supply chains following the invasion of Ukraine also created an incentive to limit reliance on synthetic fertiliser. While reduced application of synthetic fertilisers can lower yields by 40-50% in conventional farming systems, agroecological systems – which use less or no synthetic inputs – are less affected and have proved to be economically resilient during the recent global food crisis.
Overuse of synthetic fertilisers is common in modern agriculture. When fertilisers are applied in excess of crop needs, the unused nutrients are lost to the environment, contributing to water pollution, air pollution, soil acidification and biodiversity loss. It is estimated that more than half of the nitrogen applied to croplands is lost to air and water rather than absorbed by crops, meaning that curbing fertiliser use brings both direct economic returns and minimises societal costs caused by the erosion of ecosystem services and impacts on human health.
Improving farming and fertiliser management can substantially reduce nitrogen pollution while maintaining or even increasing crop yields. A global synthesis of 1,521 field observations identified 11 agricultural management practices that can reduce nitrogen losses from croplands to air and water by 30-70%, while increasing crop yields by 10-30% and improving nitrogen use efficiency by 10-80%.
The management practices in question include agroecological approaches that focus on strengthening natural nutrient cycling and improving soil health, such as legume crop rotations, organic amendments such as crop residue and biochar, reduced tillage, and buffer zones such as vegetated strips, as well as precision agriculture approaches that aim to increase the efficiency of fertiliser use through improved targeting and timing of applications, such as optimising fertiliser rates, and improving fertiliser placement and timing.
Benefits of agroecological practices are proven
The combined adoption of these practices at scale could allow global croplands to take up about 20% more nitrogen, directly supporting higher crop yields, with 21% less fertiliser use and 32% less nitrogen pollution, while generating up to an estimated USD 600 billion in societal benefits through improved food supply, human health, ecosystems and climate outcomes.1Specifically, the study puts savings in the range of USD 476 ± 123 billion.
Beyond the above study, there is substantial evidentiary support for the capacity of agroecological practices that reduce fertiliser use to maintain or increase yields.
For example, legume–crop rotations have been found to increase yields of rice, wheat and maize by around 20% on average, while intercropping systems have been shown to raise grain yields by about 22% compared with monocultures. Practices such as cover cropping can also significantly reduce nutrient losses, with studies finding up to a 69% reduction in nitrate leaching compared with fallow fields. Evidence suggests that combining multiple agroecological practices tends to produce the greatest benefits, leading to higher and more stable yields over time compared with conventional systems.
The current crisis underscores the risks of heavy reliance on synthetic fertilisers. As fertiliser markets are tightly linked to fossil fuels and geopolitically sensitive supply chains, disruptions can quickly cascade into higher production costs and food prices. Reducing dependence on these inputs would make agricultural systems more resilient while also delivering environmental and economic benefits.
