Iran-Israel-US War To Trigger A Food Crisis? Fertiliser Supply Chains Buckle Under New Maritime Threats

Farmers worldwide, including those in India, are rushing to secure critical fertiliser supplies as the escalating conflict between the US, Israel, and Iran threatens global trade routes. Approximately one-third of the world's fertiliser supply passes through the Strait of Hormuz, a vital maritime passage that Iran has threatened to close in response to ongoing military strikes.

The disruption comes at a particularly sensitive time for global agriculture. Farmers in the Northern Hemisphere are preparing for the spring fertilisation season, while those in the Southern Hemisphere are approaching winter-crop planting. The conflict had  led an immediate surge in prices, with the cost of natural gas, a key component in fertiliser production, soaring globally.

Impact On India and Global Production

In India, urea manufacturers had already begun to curb output following the suspension of liquefied natural gas (LNG) supplies from Qatar, which was triggered by recent attacks. Similarly, in Pakistan, major fertiliser firms have reported suspensions in their gas supplies.

The market reaction has been swift. In the US, prices for urea jumped by 70 dollar in a single week to reach 550 dollar per ton. Prices of Egyptian Granular Urea surged by nearly 27 per cent, reaching 620 dollar per metric ton. In Europe, Poland’s state-run producer, Grupa Azoty, temporarily stopped taking orders due to inflated production costs driven by record-high gas prices.

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Fears Of Long Term Food Inflation

Analysts cautioned that while global grain reserves are currently sufficient to prevent immediate shortages on supermarket shelves, a prolonged conflict could lead to a significant drop in crop yields. Experts suggest there is typically a six-to-nine-month lag between fertiliser application and food reaching consumers. This implies that the world could face a sharp rise in food inflation by the end of the year.

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The crisis is particularly acute for small-scale farmers in the Global South, who are often unable to stockpile supplies or absorb the high input costs. In Southeast Asia, palm oil production, which is highly nutrient-intensive, is at risk, as many farmers may be forced to skip fertilisation cycles entirely.