Soaring Fertiliser Costs Threaten Global Food Security

The Strait of Hormuz, a vital route for energy, accounts for about 20 percent of global oil shipments. Its recent closure, following the U.S.-Israeli attack on Iran, has triggered a historic oil supply disruption, according to the International Energy Agency (IEA). This disruption has caused fertiliser prices to spike, threatening agricultural systems worldwide.

In the past three months, fertiliser costs have surged across major categories—urea, potash, and phosphate. This increase aligns with energy price volatility and supply chain issues. Natural gas, crucial for ammonia production, has seen inflated prices as European producers struggle to secure reliable inputs amidst geopolitical instability. The World Bank reports a 45% rise in urea prices year-to-date, adding pressure on agricultural producers globally.

This trend coincides with planting schedules in key economies. Farmers in India, Brazil, and sub-Saharan Africa face significant challenges. Aditi Sinha, an agricultural economist at the International Fertilizer Association, stated, "Access to affordable fertilisers is crucial for maintaining global crop yields. Persistently high prices risk cascading losses across supply chains."

Geopolitical uncertainties have intensified inventory hoarding among major suppliers like Russia and China, reducing availability in export markets. Russia, responsible for roughly 13% of global fertiliser exports, has curtailed shipments amid sanctions, while China’s phosphate export restrictions remain firmly in place.

Nations with fragile food systems will bear the brunt. The World Food Programme (WFP) warns of escalating famine risks in East Africa, where agriculture heavily relies on external inputs. The WFP’s latest bulletin indicates that maize and wheat yields could drop by up to 30% in some regions due to limited fertiliser application. Smaller-scale producers in Southeast Asia face similar challenges as rising input costs erode profit margins.

In developed markets, the impact is subtle yet significant. In the United States, farming cooperatives report nearly double the fertiliser expenses compared to 2022. European farmers, particularly in Germany and France, are similarly strained due to reliance on Russian ammonia imports.

"This is no longer just an agricultural issue; it’s a global stability issue," warned Martin Köhler, Director of Food Systems at the World Economic Forum. Prolonged disruptions in fertiliser affordability and availability risk inflating global food prices, which are already 24% higher than their 2020 baseline, according to the FAO Food Price Index. Köhler added that the disproportionate impact on developing economies could spark heightened social unrest, reminiscent of the food-related protests of 2007-2008.

Options for mitigation are limited in the near term. The European Union’s attempts to subsidise fertiliser production face profitability constraints due to high gas prices. Imports from alternative markets like Morocco could alleviate some pressure, but logistical bottlenecks remain. Meanwhile, international policy responses are fragmented. The G20 Agriculture Ministers’ Meeting in September failed to produce actionable commitments to address fertiliser trade impediments.

In the long term, reducing dependency on high-energy fertilisers may be essential. Research into bio-based fertilisers and regenerative agricultural practices offers promise, but mass adoption remains technologically and logistically distant. "Farmers cannot simply pivot to alternatives overnight," noted Sinha. "For many, particularly in the Global South, these solutions are neither scalable nor affordable in their current forms."

This interdependence between geopolitical conflict, energy markets, and agricultural inputs highlights the fragility of global food systems. As policymakers deliberate, the timeline for preventing a full-scale food crisis shortens. Immediate intervention appears vital, whether through coordinated diplomacy to stabilise trade routes or fiscal support to cushion input costs.

The urgency of action is clear. Rising fertiliser prices and declining crop yields reflect the cost of inaction. The consequences may soon extend beyond spreadsheets, impacting supermarket shelves and dinner tables worldwide.