A worker spreads fertilizer after planting potatoes at Bluff View Farms in West Jefferson, North Carolina, as shown in a photo by Allison Joyce/Getty Images North America. High fertilizer costs, worsened by the conflict in Iran, have stressed farms already dealing with weather issues, tariffs, and high expenses in fuel and labor.
Effects of the Iran Conflict on Fertilizer Supply
When hostilities with Iran began, global concerns focused on the slowdown of oil shipments. Yet, an overlooked issue was the restriction of fertilizer exports. Before the conflict, approximately one-third of the world’s maritime fertilizer trade passed through the Strait of Hormuz. This vital route has become a chokepoint.
As a result, fertilizer shipments from the Persian Gulf dropped, leading to price increases worldwide. Additionally, the conflict caused a global shortage of natural gas, essential in nitrogen fertilizer production. This situation has impacted U.S. farmers who faced increased fertilizer costs and limited supplies during their planning for the upcoming growing season.
Impact on Consumer Prices
Chris Barrett, a professor of agricultural economics at Cornell University, explains that while consumers might see higher food prices between September and January, this will not be primarily due to fertilizer issues. Instead, food inflation usually stems from broader issues like labor shortages and fuel costs.
Adjustments by U.S. Farmers
The Fertilizer Institute notes that about one-third of fertilizer in the U.S. is imported. Although little of this comes through the Strait of Hormuz, global market pressures still impact U.S. suppliers.
An American Farm Bureau Federation survey in April revealed that 70% of respondents could not purchase all the fertilizer they needed. Corn and wheat producers, heavily reliant on fertilizers, can spend about a third of their costs on fertilizers alone. Half of those surveyed indicated they would apply less fertilizer due to its high price and scarcity.
Despite some farmers securing supplies early enough to avert immediate impacts, future worries persist. Corn growers expressed more concern about the 2027 crop than the current season. Many plan to plant crops needing less nitrogen fertilizer, like soybeans, due to rising costs.
According to USDA data, corn planting this year is expected to drop to 95.3 million acres from last year’s 98.8 million acres. In contrast, soybean acreage is likely to increase to 85.4 million acres from 81.2 million acres.
Minimal Impact on U.S. Grocery Prices
If higher fertilizer prices result in lowered harvests, retail price increases would be modest. A TD Economics analysis suggests that a 2-5% production shortfall in North America might cause food inflation to rise by 0.1-0.5 percentage points in 2027. However, experts note that farmers typically absorb the brunt of fertilizer costs due to limited bargaining power with wholesalers.
Rob Vos, from the International Food Policy Research Institute, describes how buyers look elsewhere when farmers’ operating costs rise. Additionally, only a fraction of consumer spending on food reaches farms, with the bulk going to other supply chain entities.
Global Implications
In regions like Africa and Asia, the fertilizer shortage could have severe outcomes. Jorge Moreira da Silva, UN Office for Project Services’ Executive Director, indicated that limiting shipments through the Strait of Hormuz could be significant for poorer countries relying on Persian Gulf fertilizer, including Sudan, Sri Lanka, Tanzania, and Somalia.
Recovery and Adaptation in the Fertilizer Sector
Some fertilizer prices have recently fallen after the U.S. and Iran agreed to reopen the Strait of Hormuz. Also, the Trump administration has suspended “countervailing duties” on specific phosphate imports to help lower costs for American farmers.
Nevertheless, a full recovery in the fertilizer industry may take weeks or months as production normalizes. Persistent high prices could affect U.S. farmers’ plans for autumn crops.
Farmers are considering alternative methods to mitigate future supply chain disruptions. As the cost of traditional fertilizers rises, practices like using manure, compost, and cover crops become more appealing for soil replenishment.