Farmer Rajbir Singh bends over the ground in his field in Uttar Pradesh, India, and digs up a ripe potato. Once they have finished harvesting here, the farmer wants to grow millet in the field at the end of March. On this morning at the end of February, five days before the start of the Iran War, Singh had no idea that the war would soon affect him as a farmer in his everyday life. The state of Uttar Pradesh, where the 57-year-old man lives, is considered India’s agricultural field. About a third of India’s wheat grows here, a third of all potatoes and around 20 million tons of millet.
In front of a small altar next to his house, Singh prays to Shiva for health and a bountiful harvest. But he doesn’t want to rely on divine help. So on the day of sowing in a few weeks, he will buy nitrogen fertilizer from the Uttam Veer brand in the shop in his village, at the current price of 300 rupees for the 45-kilogram package, the equivalent of three euros. This is around a tenth of the price in Germany and is only possible because the Indian government is subsidizing the fertilizer to the tune of 16 billion euros in the current financial year. It is even more than is budgeted for education. Other countries, poor in income and rich in people, such as Indonesia, Pakistan, Bangladesh and Vietnam, also spend billions on fertilizer. It is the price of food safety.
Without gas, there is no fertilizer
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But fertilizer, or rather lack of fertilizer, could now be fatal for farmers all over the world. While everyone around the world has been talking about oil shortages since the start of the Iran War, it is hardly known that the fertilizer markets are also in trouble. The Middle East is one of the world’s largest producers of chemical fertilizers. About a third of globally traded fertilizer and almost half of all sulfur exports usually pass through the Strait of Hormuz.
According to commodity market analysts Kpler, 21 freighters carrying a total of almost a million tonnes of fertilizer were stuck in the Gulf region at the beginning of the week. Since the strait has been virtually blocked, prices have been climbing. Urea, the most important fertilizer in agriculture, rose by around 30 percent within a week to its highest level since 2022. The crisis not only affects importers of fertilizer, but also countries that produce fertilizer themselves but rely on energy from the Gulf region. Fertilizer is considered a “refined gas” and production is very energy-intensive; This accounts for 70 to 80 percent of the production costs. Above all, there is no fertilizer without gas.
“The war comes at the worst time for farmers”
The disastrous thing: Mineral fertilizer, which is essential for yields in fields around the world, is urgently needed right now. “The war comes at the worst possible time for farmers,” said Chris Vlachopoulos, fertilizer analyst at price service ICIS. In many regions of the northern hemisphere, the agricultural season has begun, plants are sprouting, and right now they need fertilizer so that they produce enough yield. Farmers now either have to pay significantly more for fertilizer, forgo it or even grow something else.
From the USA, for example, we hear that farmers could switch from corn to other crops that require less fertilizer if it remains so expensive. What makes matters worse is that the markets are organized seasonally and largely function according to the “just in time” principle. “Unlike oil, there are no strategic fertilizer reserves in the world,” says market analyst Vlachopoulos. Purchased and shipped according to the cultivation calendar, not in stock.
The consequences for world food supply are difficult to estimate and will depend primarily on how long the war lasts. The United Nations World Food Program has already warned that rising food and fuel prices could worsen global hunger. Any disruption to the fertilizer trade would jeopardize the availability of fertilizer, reduce yields and drive up global food prices. Analyst Vlachopoulos sees impacts of a financial rather than physical nature: higher fertilizer prices increase production costs and could influence farmers’ cropping decisions, particularly in the northern hemisphere where planting is imminent. “Fertilizer is essential for global food production, but at this stage the conflict poses no immediate risk of global famine,” he says.
Millions of tons of lost harvest possible
However, the situation should not be underestimated. This is emphasized by trade economist Hendrik Mahlkow from the Kiel Institute for the World Economy. “The risk of food supply shortages clearly exists, and is most acute in sub-Saharan Africa,” he says. More than 90 percent of the fertilizer used there is imported, and households spend a large part of their income on food. Nitrogen-intensive foods such as corn are particularly susceptible to fertilizer shortages. Even moderate declines in nitrogen application could result in disproportionate losses in yield. “This could translate into millions of tons of lost harvest,” says Mahlkow.
The situation is also tense in South and Southeast Asia. Call to Farmer Singh in India a few days after the start of the war. So far, people in Uttar Pradesh only know about the war in the Middle East through social media. But that’s not entirely true. “Diesel for tractors is in short supply,” says the farmer, as is gas for cooking. He is not worried about his millet harvest because of the war. But he could be wrong. After all, India not only imports 85 percent of its oil, but also a significant portion of its gas. Half of the oil and two-thirds of the gas pass through the Strait of Hormuz. The dependencies also make the country’s fertilizer production more difficult: New Delhi has ordered its fertilizer manufacturers to reduce their production to 70 percent. Many factories have even stopped production entirely.
Fertilizer shortage as a ticking time bomb
Since the start of the war, the price of Qatari liquefied natural gas has risen by 90 percent. This means that the production costs for fertilizer are likely to skyrocket. Before the war, the Indian gas importer Petronet usually bought LNG and shipped it across the Strait of Hormuz to Indian terminals, from where it made its way to fertilizer manufacturers. These converted the hydrogen from the gas using nitrogen under high pressure and at high heat into ammonia, the basis for urea.
The price jumps are affecting India, but the world’s fourth-largest economy can take on more debt relatively easily. Things look different in countries like Indonesia. There is a “time bomb ticking” in the country, said Alfatehan Septianta from the think tank Indonesia Food Security Review. The country’s rice reserves will not last longer than 44 days in the event of a crisis. Indonesia imports a good portion of its phosphate fertilizer. Important suppliers such as China have stopped fertilizer exports since last year. Other countries also have to accept losses. Bangladesh has closed four of its five fertilizer factories. Brazil, which imports around 85 percent of its fertilizer, could also be affected, with implications for global agricultural commodity markets.
The most immediate danger, however, is for the Gulf states themselves, which export a lot of fertilizer but are dependent on food imports, says economist Mahlkow. “The extent of the food crisis now depends crucially on how long the sea route closure lasts and whether alternative routes can be established in that case.”
Food price increases possible
The economist says that the situation is less dramatic for Germany and Europe than for import-dependent emerging countries, but that it should be taken seriously. Europe imports only very small quantities of fertilizer directly from the Gulf region. However, since fertilizers are traded on the world market and Europe is a net importer of nitrogen fertilizers, price jumps also affect farmers here. According to the Raiffeisen Association, fertilizer costs can account for up to a fifth of the total operating costs for German farmers. In addition, Europe’s own fertilizer production is under pressure. The domestic fertilizer industry has significantly reduced its production after the energy crisis in 2022. Companies like Yara or SKW Nitrogenwerke Piesteritz, which are based in Germany, have been complaining about high energy prices and poor location conditions for years.
But what consequences does the fertilizer crisis have for consumers and food prices? The connection is not entirely direct, says Samuel Taylor, agricultural market analyst at the Dutch Rabobank. “While jumps in oil and gas prices drive up inflation for consumers almost immediately, the effect of fertilizer is much more complex.” Just because a farmer has to pay more for fertilizer does not mean that he can charge higher prices for his grain after the harvest.
The IfW economist Mahlkow sees it similarly. The price increase will only have an impact on fertilizer costs later. The price increases affect spring sowing in 2026. If farmers reduced fertilization or switched to less nitrogen-intensive crops, yields could decline and food prices could rise in late summer and fall, he says. He believes that price increases for food in Germany and Europe are likely, but the question is the extent and time horizon.
Parallels to the start of the Ukrainian war in 2022
If the situation on the Strait of Hormuz stabilizes within a few weeks, Mahlkow expects a temporary price surge, which should decline relatively quickly in 2025, similar to the situation after the Twelve-Day War. “If a blockade were to last for months, there would be a risk of structural distortions on the agricultural markets, with noticeable consequences for consumer prices.” The International Food Policy Research Institute is already warning that the normalization of food prices that has just been achieved is once again at risk.
Some parallels can be drawn with the start of the Ukraine War in 2022. As after the Russian attack, a chain reaction can be seen: rising gas prices drive up ammonia prices, which in turn affects urea and ultimately food prices. Both conflicts threaten fertilizer supplies. But in 2022 it was mainly about sanctions against Russian gas and Ukraine’s failure as a grain exporter.
At that time, the blockade of the Black Sea region had a direct impact on the markets. Countries that relied on grain had to look for short-term alternatives. The Iran war, however, is not about central export flows of food, but about fertilizer as an upstream product whose effects are not as immediately noticeable.
Why fertilizer is so important for agriculture
A crisis like this also draws attention to the dark side of fertilizer. Mineral fertilizer is considered the key to high yields, and the Haber-Bosch process on which its production is based is sometimes considered the most important invention of the 20th century. Fritz Haber received the Nobel Prize in Chemistry in 1918 for developing the process that converts nitrogen from the air into ammonia. It is undisputed that modern agriculture would not be nearly as productive without fertilizers. “50 percent of the world’s food only exists thanks to chemical fertilizers,” says analyst Chris Vlachopoulos. Almost two thirds of the world’s population owe their existence to the Haber-Bosch process, says Canadian-Czech energy researcher Vaclav Smil. Without synthetic nitrogen, the world’s soils would not be able to feed eight billion people.
But in times of crisis like these, it becomes clear that dependence on fertilizer can take its toll. Fertilizing less because of high prices seems obvious at first, but it can have consequences over several years. Nutrients are removed from the field with every harvest. If they are not replaced, a deficit will arise, the soil will be put under greater strain, and this can result in lower yields the next season.
So why not become less dependent on industrially produced fertilizer and fertilize more organically, with manure or manure? It’s not quite that simple. In organic farming it is common practice to hardly use any mineral fertilizers. Instead, more emphasis is placed on manure and liquid manure, on other crops, on crop rotations and nutrient cycles. This makes organic farmers less vulnerable to price shocks. Conversely, you often have to make do with lower returns. This fertilizer crisis also leads back to the basic question of how much yield security a highly productive agriculture needs and how much dependence on industrially produced products is acceptable. And the question remains as to how to harvest as much as possible from the earth’s limited area without destroying resources.
In any case, in Rajawal, India, farmer Singh will sow the millet in a few weeks, just as he planned. He buys his bag of nitrogen fertilizer at the local store as usual, maybe it will be more expensive, maybe it will come later. He has hope that the consequences of the war will not ruin his harvest – but he can no longer be completely sure.
