Fertilizer crisis hits farmers as Iran war disrupts supply

Farmers across the globe are grappling with serious consequences as the Iran war disrupts crucial fertilizer supply chains and drives up energy costs. The conflict has led to Tehran’s near-shutdown of the Strait of Hormuz, a critical maritime passageway that normally handles about a fifth of the world’s oil shipments and nearly a third of global fertilizer trade.

The timing couldn’t be worse for many agricultural regions, where planting season is already underway or about to begin. “In the worst case, this means lower yields and crop failures next season. In the best case, higher input costs will be included in food prices next year,” warns Carl Skau, deputy executive director of the World Food Program.

For smallholder farmers in developing nations, the situation is particularly dire. In Punjab, India, rice farmer Baldev Singh expresses the anxiety felt by many: “Right now, we are waiting and hoping.” Singh, 55, believes many small-scale farmers—who make up the majority of India’s agricultural workforce—may not survive without government intervention to subsidize fertilizers when demand peaks in June.

The blockade has severely restricted the flow of nitrogen and phosphate, two essential fertilizer nutrients. Supplies of nitrogen, including urea—the most widely traded fertilizer that boosts plant growth and crop yields—have been hardest hit due to shipping delays and skyrocketing prices of liquefied natural gas, a key ingredient in fertilizer production.

According to Chris Lawson of CRU Group, a London-based commodities consultancy, the conflict has restricted approximately 30% of global urea trade. Some countries are already facing critical shortages. Raj Patel, a food systems economist at the University of Texas, points out that Ethiopia gets over 90% of its nitrogen fertilizer from the Gulf through Djibouti, a supply route that was already under pressure before hostilities began in February.

“The planting season is now,” Patel emphasizes. “The fertilizer isn’t there.”

Phosphate supplies, which support root development, are also under significant strain. Saudi Arabia produces about a fifth of the world’s phosphate fertilizer, and the region exports more than 40% of the world’s sulfur, a key ingredient derived from oil and gas refining.

Even after the war ends, resuming normal shipments through the strait will be complicated. Owen Gooch, an analyst with Argus Consulting Services, notes that Gulf producers would need clear security guarantees before fully restarting operations, and insurance costs would almost certainly rise.

The Indian government has prioritized urea supplies for domestic use and provides fertilizer manufacturers with about 70% of their natural gas requirements. Despite these efforts, some plants are running below capacity, leading to reduced output.

Hanna Opsahl-Ben Ammar of Yara International, one of the world’s largest fertilizer companies, underscores the gravity of the situation: “The food system is fragile, and it depends on stable fertilizer supply chains to ensure farmers can produce the food the world relies on.”

The timing of this disruption is particularly problematic because fertilizers are typically applied just before or at planting. When deliveries are delayed, crops miss critical early growth stages, resulting in diminished yields, even if supplies improve later.

American and European farmers, currently in their main planting season, are already feeling the impact. Asian agricultural regions expect to be hit in the coming months as they approach their first planting season.

“Our crops out in the field need nitrogen now—the sooner the better—so they can get off to a good start,” explains Dirk Peters, an agricultural engineer who operates a farm outside Berlin.

While fertilizer prices haven’t yet reached the peaks seen after Russia’s invasion of Ukraine, grain prices were higher then, helping farmers absorb increased costs. With today’s lower grain prices, profit margins are tighter, forcing farmers to consider switching to less fertilizer-intensive crops or applying less fertilizer, which ultimately reduces yields and can lead to higher consumer prices.

Alternative supply sources are limited. China, the world’s largest producer of nitrogen and phosphate fertilizers, is prioritizing domestic supply, and urea shipments likely won’t resume until May. Russian plants, another major source, are already operating near full capacity.

Across Africa, where many farmers rely on fertilizer imported from the Middle East and Russia, the effects are already pronounced. Early heavy rains in East Africa have left farmers with only about a week of dry weather to prepare fields and apply fertilizer, according to Stephen Muchiri, a Kenyan maize farmer and CEO of the Eastern African Farmers Federation.

Even short delays can significantly impact yields. Patel cites research from Zambia showing that fertilizer shortages can reduce maize yields by about 4% in a single season.

Some governments are responding with subsidies, promoting domestic production, and controlling exports. India already subsidizes fertilizer to ease the financial burden on farmers, but these subsidies leave less money for long-term agricultural investments. The country has budgeted $12.7 billion this year for urea subsidies alone, according to the U.S.-based Institute for Energy Economics and Financial Analysis.

The crisis could potentially serve as a catalyst for change. Oliver Oliveros, executive coordinator of the Agroecology Coalition, suggests that reducing dependence on imported fertilizers could better protect farmers and consumers from energy price fluctuations and climate shocks.

“This could be a turning point,” he concludes.