Fertilizer Shortages Linked to Iran Conflict Threaten 10 Billion Meals Weekly

What happened

Svein Tore Holsether, the chief executive of fertilizer producer Yara, warned that hostilities in the Gulf have blocked critical shipping through the Strait of Hormuz. This interruption is jeopardizing global food production, as the supply of fertilizers and their key ingredients remains restricted. Holsether estimates that the current lack of nitrogen fertilizer could result in up to 10 billion fewer meals being produced globally every week.

What's new in this update

Global nitrogen fertilizer production has already decreased by half a million tons due to the current geopolitical situation. Fertilizer prices have climbed 80% since the beginning of the war involving the US, Israel, and Iran. While the UK is unlikely to face immediate food shortages, the Bank of England and the Food and Drink Federation anticipate food inflation could rise significantly, potentially reaching 10% by December as production costs filter down to consumers.

Key details

A failure to apply nitrogen fertilizer can reduce crop yields for certain varieties by as much as 50% in the first season. United Nations data indicates that roughly one-third of global fertilizer supplies transit through the Strait of Hormuz. Regions most immediately affected by these supply chain disruptions include sub-Saharan Africa, Southeast Asia, and Latin America, where under-fertilization is already an existing challenge for farmers.

Background and context

Farmers globally are contending with a series of rising input costs, including higher diesel prices for machinery and increased energy costs. However, the prices farmers receive for their crops have not yet adjusted to compensate for these higher overheads. This disparity, combined with the global nature of the fertilizer market, means that a supply shock in the Gulf has rapid, cascading effects on food affordability and scarcity across multiple continents.

What to watch next

The impact of fertilizer shortages in Asia is expected to manifest in food prices by the end of the year, once smaller-than-expected harvests reach the market. Experts are monitoring major staples like rice, which may see yield drops if the crisis extends beyond the current planting season. There is also growing concern that a bidding war for food will emerge, where wealthier nations in Europe and elsewhere may inadvertently price out vulnerable populations in developing countries.