Iran War Food Security Risks Surge as Fertilizer Costs Nearly Double

Iran War Food Security Risks Surge as Fertilizer Costs Nearly Double

The prolonged conflict in the Persian Gulf is compounding fuel and fertilizer supply shocks, threatening higher food prices from farm gates in the American Midwest to grocery shelves in London and Lagos.

KEY TAKEAWAYS

1. Fertilizer price surge in the US has seen benchmark New Orleans nitrogen values climb to $600 per tonne from $350 in late December.
2. Strait of Hormuz disruption has blocked roughly 30% of global seaborne fertilizer trade since early March 2026.
3. Global food price inflation is now forecast at 3.1% for US grocery bills in 2026, nearly double the USDA's start-of-year projection.
4. Spring planting costs are rising at the worst possible time, with corn and soybean farmers making purchasing decisions as nitrogen prices spike.
5. Emerging market economies where food and fuel account for 30-50% of the consumer basket face acute inflationary pressure.

Iran War Food Security Under Strain as Conflict Drags On

Iran war food security concerns have escalated rapidly since US and Israeli forces launched coordinated airstrikes on Iran on 28 February 2026. What many analysts initially anticipated as a contained operation has evolved into a protracted confrontation, with Tehran showing no intent to capitulate.

Iran announced on 4 March that the Strait of Hormuz was closed and threatened to attack any ship that attempted to pass. The waterway, just 34 kilometres wide at its narrowest point, had previously facilitated the transit of approximately 20 million barrels of oil per day and served as a critical corridor for fertilizer shipments from the Persian Gulf.

Iran has struck gas refineries in Qatar and Kuwait, infrastructure that industry observers estimate could take more than six months to restore. On 26 March, Iran selectively allowed vessels from China, Russia, India, Iraq, and Pakistan to transit the strait, along with Malaysian and Thai ships following diplomatic talks. However, the passage remains effectively closed to Western-flagged commercial shipping.

Fertilizer Price Surge Threatens Crop Input Economics

The fertilizer price surge has been swift and punishing. Benchmark New Orleans nitrogen prices have climbed to approximately $600 per tonne, up from $350 in late December, representing a near-doubling within weeks of the strait's closure.

Analysts have reported that FOB granular urea prices in Egypt, a bellwether for nitrogen fertilizers, jumped to around $700 per metric tonne from a pre-war range of $400 to $490. These price movements reflect the outsized role of the Persian Gulf in global fertilizer markets.

According to the International Food Policy Research Institute (IFPRI), up to 30% of global fertilizer trade passed through the Strait of Hormuz in 2024, along with an estimated 20% of liquefied natural gas, a key feedstock for nitrogen production. Nearly half of the world's urea exports originate from countries on the western side of the strait.

The supply concentration makes global agriculture structurally vulnerable to any disruption in this corridor. IFPRI noted that while the International Fertilizer Association's November 2025 outlook projected nitrogen capacity to rise 4% over 2024 levels, this growth is clearly insufficient to compensate for the supply reduction caused by the war.

US Farmers Face a Compounding Cost Crisis

Spring planting costs are a critical concern for American producers. Corn Belt farmers typically plant between late April and early May, which means purchasing decisions for nitrogen fertilizer are being made now, precisely as prices are peaking.

Corn farmers are already losing 85 cents per bushel according to the National Corn Growers Association, with corn prices down nearly 50% and soybeans down 40% since 2022, while fertilizer and pesticide costs have barely eased.

For grain producers, fertilizer constitutes between one-third and one-half of total operating costs. The USDA had already projected before the war that 2026 would be a year of constrained profitability. Net farm income was forecast at $153.4 billion for 2026, roughly $48 billion or 24% below the record highs reached in 2022, underscoring what analysts describe as a generational downturn in the farm economy.

Direct government farm programme payments are forecast at $44.3 billion for 2026, a 45.2% increase from 2025, with supplemental and ad hoc disaster assistance payments remaining elevated. The Trump administration had already stepped in with the $11 billion Farmer Bridge Assistance Programme to offset losses incurred in 2025. The war has only compounded the financial strain.

A group of 54 agricultural organisations recently wrote to President Trump calling for market relief, citing skyrocketing fuel and fertilizer prices as planting season began across much of the country.

Strait of Hormuz Disruption Rewrites Global Trade Routes

The Strait of Hormuz disruption extends well beyond fertilizer. The International Energy Agency has characterised the closure as the largest supply disruption in the history of the global oil market, with Brent crude prices surging more than 50% from the start of the year by mid-April.

The World Bank's April 2026 Commodity Markets Outlook projects energy prices to surge 24% this year to their highest level since Russia's invasion of Ukraine in 2022, with overall commodity prices forecast to rise 16%.

The disruption has also triggered a scramble for alternative supply routes. Saudi Arabia's existing pipeline infrastructure to bypass the strait is designed for crude oil, not ammonia or urea. G7 countries do not maintain strategic fertilizer reserves to match their oil stockpiles. This structural gap has left importers exposed.

Iran agreed to a UN request on 27 March to allow humanitarian and fertilizer shipments through the strait, a concession aimed at addressing the disruption during the Northern Hemisphere's spring planting window. However, the practical volume of shipments reaching markets through these limited exemptions remains marginal relative to pre-war flows.

Global Food Price Inflation Builds Across Supply Chains

Global food price inflation is now emerging as the downstream consequence of the energy and fertilizer shock. The transmission mechanism is straightforward: higher fuel costs raise transportation expenses throughout the supply chain, while elevated fertilizer prices either compress farm margins or reduce input application rates, lowering yields.

The USDA's latest report shows US food-at-home prices are expected to increase 3.1% in 2026, nearly double the agency's projection at the start of the year. David Ortega, a food economist at Michigan State University, has noted that diesel fuel is integral throughout the food supply chain, from tractors to refrigerated trucks, and that higher costs would inevitably reach the consumer.

In the United Kingdom, the National Farmers' Union (NFU) has formally warned that food prices are likely to rise as a direct result of the conflict. NFU President Tom Bradshaw outlined how disruption to global oil and gas markets has affected the price of fuel and fertiliser, both key inputs for spring planting and livestock forage production.

The NFU has raised particular concerns about the lack of transparency in input pricing, with some UK farmers not receiving a price for fertilizer until delivery. Glasshouse growers in Britain, who rely on natural gas to heat facilities for tomato, cucumber, and pepper production, are expected to see price increases within weeks. Broader commodity impacts could follow over a three-to-six-month horizon.

Emerging Markets Face Disproportionate Risk

According to IMF analysis, food accounts for approximately 43% of consumption in low-income developing countries, compared with 25% in emerging market economies and 12% in advanced economies. This disparity makes any spike in fertilizer and food prices a socio-political risk, particularly where fiscal resources to cushion the impact are limited.

The World Bank projects inflation in developing economies to average 5.1% in 2026, a full percentage point higher than expected before the war, and warns that in a scenario of prolonged disruption, this figure could rise to 5.8%.

The IMF has cut its 2026 global growth outlook to 3.1%, down 0.2 percentage points from its January forecast, with a worst-case scenario of around 2% growth if supply disruptions persist. At that level, the fund warns, the global economy would be approaching recession territory.

Countries across South Asia, sub-Saharan Africa, and Southeast Asia face compounding pressures from higher import bills, currency depreciation against a stronger dollar, and tightening financial conditions. Several nations including the Philippines, Pakistan, Bangladesh, Nigeria, and Vietnam are already experiencing severe fuel shortages, with the Philippines declaring a state of energy emergency on 24 March.

Spring Planting Costs and the Crop Yield Outlook

Spring planting costs now represent a decisive variable for the 2026-27 crop cycle. Farmers across the Northern Hemisphere face a narrow window for planting decisions, and the fertilizer shock is compressing their options precisely when those decisions must be made.

The International Rice Research Institute has warned that if shipping disruptions through the Strait of Hormuz continue, the energy and fertilizer channels may become more consequential risks than the initial logistic shocks, particularly for Asia's next crop cycle.

The NDSU Centre for Agricultural Policy and Trade Studies noted that the Persian Gulf accounts for a larger share of the global fertilizer trade than Russia, and critically, unlike the 2022 Ukraine disruption, farmers cannot offset rising input costs through higher grain prices because Iran is not a major grain producer.

This distinction matters. During the 2022 Black Sea disruption, surging grain prices partially compensated for elevated input costs. In the current crisis, grain prices remain depressed by the global supply glut left over from 2025's record harvests, while input costs are climbing sharply. The margin squeeze is structural, not temporary.

If nitrogen availability remains constrained through the growing season, lower application rates will translate directly into reduced yields for corn, wheat, rice, and other nitrogen-intensive crops. The downstream effect on global food supplies would be felt most acutely in late 2026 and into 2027.

Policy Responses and the Path Forward

Governments on both sides of the Atlantic are responding with a mix of short-term interventions and strategic reviews. The Trump administration imposed a 60-day waiver of the Jones Act in mid-March to lower domestic shipping costs, though analysts noted this does nothing to move product out of the Persian Gulf.

World Bank Chief Economist Indermit Gill warned that the war is hitting the global economy in cumulative waves: first through higher energy prices, then higher food prices, and finally, higher inflation that will push up interest rates and make debt more expensive.

In the UK, the NFU has urged the government to avoid reducing agri-food tariffs as a response to inflation, arguing that such a move would have minimal impact on consumer prices while devastating domestic producers.

IFPRI has highlighted the potential of green ammonia, produced through electrolysis powered by renewable energy rather than natural gas, as a structural solution that could enable nitrogen production in more countries and reduce the sector's vulnerability to geopolitical shocks. However, such transitions require long lead times and substantial investment. In the near term, the global agriculture sector remains exposed to whatever trajectory the conflict takes.

Outlook: A Prolonged Conflict Means a Prolonged Food Price Shock

The balance of risks points to an extended period of elevated input costs and downstream food price pressure. The war shows no signs of reaching a swift resolution. Iran continues to demonstrate both military capability and diplomatic leverage through selective passage rights in the strait.

Even if the Strait of Hormuz reopens, restarting production and transport for fertilizers could take weeks, time that Northern Hemisphere farmers do not have.

The implications extend from the corn fields of Iowa to the rice paddies of South Asia. For the world's poorest consumers, who spend the largest share of their income on food, the crisis is not abstract. It is arriving at the grocery store and the village market, driven by a conflict thousands of kilometres away.

The agriculture sector's exposure to this crisis is a sobering reminder that food security remains inextricable from energy security and the stability of critical maritime chokepoints. Until the conflict ends and trade flows normalise, the grind for farmers and consumers alike will persist.