News Analysis | Fertilizer Price Hikes, Spring Planting in Trouble—Interpreting the Impact of Middle East Tensions on Global Agriculture

Xinhua News Agency, Beijing, March 19 (Reporter Chen Sida) The Strait of Hormuz carries one-fifth of the world’s oil transportation and about one-third of global maritime fertilizer trade. It is both an “oil route” and a “grain route.” Industry experts believe that as the Northern Hemisphere gradually enters the spring planting season, fertilizers and oil in the Gulf region are being stranded due to “blockages” in shipping lanes caused by the US-Israel-Iran conflict, leading to risks of fertilizer shortages, increased shipping costs, and rising food prices.

Natural gas is an important raw material for nitrogen fertilizer production. The Middle East is both a major exporter of liquefied natural gas and a key exporter of common nitrogen fertilizers such as urea. Currently, due to shipping disruptions through the Strait of Hormuz, major agricultural countries like Brazil and Sudan are unable to purchase Middle Eastern nitrogen fertilizers, while nitrogen fertilizer-producing countries like India and Pakistan are unable to obtain raw materials.

Brazil is a major global producer and exporter of agricultural products, heavily relying on imports of nitrogen fertilizers from the Middle East, Russia, and North Africa. Bernardo Silva, Executive Director of the Brazilian Fertilizer Raw Materials Industry Association, stated that the current Middle East conflict exposes the “fragility of Brazil’s fertilizer market.”

According to data from market research firm Kpler, several ships have recently been stranded in the Gulf region, carrying a total of nearly 1 million tons of fertilizer. Ideally, even if these fertilizers are shipped immediately, it would take several weeks to reach ports in various countries, then be transferred via inland barges, trucks, or trains to farms. Most fertilizers need to be applied before crops begin to grow; any delay could mean missing the spring planting season this year.

On March 11, an oil tanker is seen sailing in the Red Sea near the entrance to the Suez Canal in Egypt. (Photo by Ahmed Goma, Xinhua)

The seasonal and global nature of the fertilizer market amplifies the supply risks triggered by the Middle East situation. On one hand, unlike oil, fertilizer markets are usually based on agricultural planting seasons, and most countries lack strategic reserves. On the other hand, the global fertilizer market is highly interconnected; a supply disruption in one region can affect fertilizer prices elsewhere.

The German Frankfurter Allgemeine Zeitung recently reported that since the disruption of shipping through the Strait of Hormuz, fertilizer prices have surged. Urea prices increased by about 30% in one week, reaching the highest level since 2022.

“Clearly, there are no ships (carrying fertilizers) departing from the Gulf region now, and the fertilizer market will face a huge gap,” said Jinny Breach, a data scientist at the University of Colorado Boulder.

The global fertilizer supply shock could ultimately lead to food shortages and price increases. Joseph Glauber, senior research fellow at the U.S. International Food Policy Research Institute, said higher fertilizer prices will influence crop choices. “Farmers may opt for crops that require less fertilization rather than nitrogen-intensive crops to avoid higher input costs. Farmers in some poor countries might directly reduce fertilizer use, which could lead to lower crop yields.”

U.S. media reports indicate that soybeans require less fertilizer than corn. Given the current rise in fertilizer prices and supply uncertainties, some American farmers are planning to increase soybean planting areas.

Due to ongoing shipping disruptions through the Strait of Hormuz, international crude oil futures prices again surpassed $100 per barrel at the start of the new trading week on the evening of the 15th. Oil prices are closely linked to food prices, affecting multiple links in the food supply chain—from fertilizer use in the fields to transportation of agricultural products to supermarkets, with energy costs impacting overall food security.

On March 11, customers refuel at a gas station in Aske, northern France. The recent surge in international oil and gas prices, influenced by the US and Israel’s military conflicts with Iran, has led to significant increases in fuel prices across many European countries, adding to the cost of living pressures for Europeans. (Photo by Sebastian Kurkji, Xinhua)

Generally, some foods are not suitable for long-term storage, especially fresh produce like fruits, vegetables, meat, and dairy, which are prone to spoilage. This makes it difficult for companies to stockpile large quantities, and prices of these perishable foods are highly sensitive to oil price fluctuations.

Qatar’s Al Jazeera analyzed that refrigeration and preservation equipment may be powered by natural gas or diesel, and polyethylene used in food plastic packaging is a petrochemical byproduct. Transportation between farms, cold storage facilities, packaging plants, and supermarkets still heavily depends on fuel, and rising energy prices directly increase costs along the food supply chain.

Deborah Winsberg, CEO and founder of Corset Research, said consumers will feel the impact of fuel price increases through price tags on supermarket produce, meats, and dairy products, reflecting supply chain disruptions.

In some low-income countries, a significant portion of household income is spent on food. These countries import large quantities of grains and fertilizers, and rising oil prices could quickly trigger food shortages. A recent UN Conference on Trade and Development report stated that disruptions in shipping through the Strait of Hormuz could push up food prices, with particularly severe impacts on the most vulnerable economies.