Iran war squeezes fertilizer supply as farmers shift tactics worldwide
Disruption in the Strait of Hormuz is hitting both urea trade and LNG flows, putting new pressure on fertilizer markets. Governments and farmers are responding with stockpiles, crop shifts and more efficient nutrient use.
The war involving Iran has pushed one of the most sensitive risks in global agriculture back to the center of the market: disruption in the Strait of Hormuz is constraining both fertilizer exports from the Gulf and shipments of liquefied natural gas used to make ammonia. Deutsche Welle reported that nearly half of the world’s traded urea, the most widely used nitrogen fertilizer, comes from the Gulf. The region also accounts for about one fifth of globally traded LNG. Even after a temporary two-week ceasefire was announced, the market still has little confidence that logistics will normalize quickly.
That combination creates pressure across several parts of the food chain at once. StoneX fertilizer analyst Josh Linville described the situation as only one step away from a worst-case scenario for the fertilizer market. According to DW, fertilizer and LNG plants from Qatar to Bangladesh have already started shutting down. If those disruptions persist, higher fertilizer and fuel costs are likely to feed into food prices, with the poorest importing countries expected to face the harshest impact.
Governments are trying to cushion the shock with reserves and subsidies. India has large rice and wheat stockpiles, while China maintains massive fertilizer inventories. DW noted that after the 2022 fertilizer shock triggered by Russia’s invasion of Ukraine, India raised its fertilizer subsidy by 233% above the original budget. But that kind of response is unevenly available: larger economies can support farmers and restrict trade to protect domestic supply, while countries such as Bangladesh, Nepal and Sri Lanka have much less room to absorb the same kind of shock.
At farm level, one of the clearest adaptation options is to change the crop mix. Soybeans and other legumes can capture nitrogen from the air and therefore need far less fertilizer than crops such as corn. The US Department of Agriculture projected at the end of March that soybean planting would rise 4% from a year earlier while corn area would fall 3%, and those surveys were conducted just before the fertilizer crisis intensified. That shift is not practical everywhere, however: in much of Southeast Asia, rice remains a staple crop and monsoon conditions sharply limit the range of viable alternatives.
Another response is to change how fertilizer is used rather than what is planted. DW cited estimates showing that crops effectively use only about half of the fertilizer applied to them, with the remainder leaking into groundwater or escaping into the air. Drones, cameras and other precision agriculture tools can help target application more accurately, although those technologies remain expensive for many poorer farmers. Still, IFPRI researcher Avinash Kishore argued that efficiency gains do not always require costly equipment: when urea prices surged in Bangladesh in 2022, farmers used less fertilizer and rice production still held steady.
Longer term, the industry is also looking at technologies that reduce dependence on gas-based inputs and maritime chokepoints. DW highlighted Pivot Bio, a US company that applies microbes to seeds so plants can access nitrogen in a different way; the company said its products were used on 5 million acres in the United States in 2023. For the current season, though, that is not enough to solve the immediate problem. The market’s first need is a more stable physical flow of fertilizer and a return of predictability to global trade.