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Amid the ongoing war in Iran, the soaring price of oil since shipping was disrupted through the Strait of Hormuz has caused great alarm.
On March 2, Ebrahim Jabari, a senior adviser to the commander-in-chief of Iran’s Islamic Revolutionary Guard Corps (IRGC), announced that the Strait of Hormuz – through which 20 percent of the world’s oil and gas is transported – was “closed”, a move that sent oil prices soaring higher than $100 per barrel.
But experts say a parallel crisis is looming – a considerable threat to global food security, caused by a looming shortage of fertiliser, essential for food production.
Why is there a shortage of fertiliser?
Nearly half of the world’s traded urea – the most widely used fertiliser – and large volumes of other fertilisers are exported from Gulf countries via the Strait of Hormuz, making global agriculture highly exposed to any disruption there.
Recent disruptions to gas supplies and shipping have already forced fertiliser plants, which use natural gas to manufacture fertiliser, in the Gulf and beyond to shut or cut their output.
After its LNG facilities were attacked, Qatar’s state-run energy firm, QatarEnergy, halted output at what is the world’s largest urea plant after it shut down gas output.
Since LNG output from Qatar has dropped off, India has cut output from three of its own urea plants. Bangladesh has also shut four out of its five fertiliser factories.
The US is already close to 25 percent short of fertiliser supply for this time of year.
Compounding shortages, urea export prices from the Middle East have surged by about 40 percent, rising from just less than $500 to a little more than $700 per metric tonne as of last Friday, according to Argus, a specialist energy and commodities price reporting agency. The price is currently close to 60 percent higher than this time last year.
How much of the world’s fertiliser does the Gulf produce?
According to one shipping services company, the Signal Group, 20 percent of the world’s fertiliser originates in the Gulf, while 46 percent of global urea supply comes from the Gulf.
Qatar Fertiliser Company (QAFCO), considered the world’s largest urea supplier, alone supplies 14 percent of the world’s urea.
Analysis by Kpler, a data and analytics company, shows that as much as one-third of global fertiliser trade could be disrupted if the closure of the Strait of Hormuz persists – only a handful of Indian, Pakistani and Chinese-flagged vessels have been allowed to pass safely in recent days.
According to Morningstar analyst Seth Goldstein, nitrogen fertiliser prices could roughly double from current levels and phosphate prices could climb by about 50 percent, the Reuters news agency reported this week.
Which countries depend the most on this fertiliser?
As of 2024, Asian countries were most heavily dependent on Gulf fertiliser exports, receiving 35 percent of Gulf urea exports, 53 percent of sulphur exports and 64 percent of ammonia exports, according to Kpler.
These exports are particularly vital for key agricultural markets, particularly India, Brazil and China, with significant volumes also going to Morocco, the United States, Australia and Indonesia.
India is particularly dependent on the Middle East for fertilisers, sourcing more than 40 percent of its urea and phosphate fertilisers from the region.
Meanwhile, Brazil is almost entirely reliant on imports for its fertiliser supply, nearly half of which transit through the Strait of Hormuz.
Why will fertiliser shortages hit food production so hard?
The timing of this disruption is especially bad because it falls in the middle of sowing season, or spring plantation season, which generally runs from mid-February to early May in the Northern Hemisphere.
For commercial farming, fertiliser is essential for almost every crop if growers want strong yields. But different crops require different kinds and amounts of fertiliser.
The world was already reeling from a urea shortage when Europe was forced to cut its supplies after it lost access to cheap Russian gas, in the wake of the onset of Russia’s war on Ukraine in 2022.
Additionally, Beijing restricted fertiliser exports, including urea, to ensure supplies for Chinese farmers first.
What does this mean for global food security?
Several of the biggest importers of Gulf fertilisers – including India, Brazil and China – are also among the world’s largest food producers.
India is one of the world’s largest producers of agriculture and food products such as rice, wheat, pulses and fruit. In 2024, Indian rice accounted for roughly a quarter of the world’s rice exports.
According to the US Department of Agriculture, Brazil now accounts for nearly 60 percent of global soya bean exports. The country also exports sugar and corn.
China is a major tea producer, supplying tea leaves worldwide as well as other agricultural staples such as garlic and mushrooms.
Hence, a prolonged fertiliser shortage and a hike in fertiliser prices could lead to some farmers skipping fertiliser use entirely. This would reduce crop yields.
That could affect food security worldwide. Lower yields for staple crops like rice, wheat, maize and soya beans would restrict global supply. In turn, that would be likely to hike food prices and potentially create localised shortages, especially in import‑dependent countries.
