The Israel-Iran conflict affects global agricultural production (Global Hotspot)

Source: People’s Daily Overseas Edition

Recently, an article titled “The World Is Facing a Fertilizer Crisis” published on the website of Germany’s Frankfurter Allgemeine Zeitung says that since the outbreak of hostilities between the United States and Israel and Iran, while global attention has been on an oil shortage, the fertilizer market has also been thrown out of balance. The conflict could threaten global food security.

At present, the U.S.-Israel-Iran conflict is still ongoing. With shipping through the Strait of Hormuz disrupted, a series of knock-on effects has been triggered in the global agricultural sector, drawing widespread attention from the international community.

Shipping disruption, fertilizer prices surge

In the first half of this year, global fertilizer prices may be 15% to 20% higher than normal levels, thereby raising global agricultural costs and food prices

A recent report released by the UN Food and Agriculture Organization shows that energy price increases related to conflicts in the Middle East have led to a sharp rise in fertilizer costs. If the situation continues to be unstable, in the first half of this year, global fertilizer prices may be 15% to 20% higher than normal, thereby pushing up global agricultural costs and food prices.

UN Food and Agriculture Organization Chief Economist Maximo Torero said that the Strait of Hormuz is a key passage for the transportation of both global energy and fertilizer. It ships about 20 million barrels of oil per day on average, accounting for about 35% of global crude oil transport; at the same time, it also carries large volumes of liquefied natural gas and fertilizer trade transportation, and sulfur in the Gulf region is an important raw material for phosphate fertilizer production. The disruption of shipping lanes has quickly been transmitted to global food and agriculture systems.

The website of Germany’s Frankfurter Allgemeine Zeitung says that about one-third of global fertilizer trade volume and nearly half of sulfur exports go through the Strait of Hormuz. Since shipping through the Strait of Hormuz has been disrupted, fertilizer prices have risen rapidly. Urea prices have reached the highest level since 2022.

“The Gulf region is one of the world’s important fertilizer supply areas, and the Strait of Hormuz is the lifeline for global fertilizer trade. At present, with shipping through the Strait of Hormuz disrupted, the supply chains for raw materials that are indispensable to global agricultural production have been partially cut off, and in the short term key essentials for agricultural production such as urea and phosphate fertilizers are facing shortages across the world.” Zhang Jianping, deputy director of the academic committee of the International Trade and Economic Cooperation Research Institute of the Ministry of Commerce, told this newspaper in an analysis. “Because large volumes of fertilizer cannot be transported to their destinations via the Strait of Hormuz, in some countries where agriculture relies on imports, agricultural production has been directly hit.”

Some German farmers, in interviews recently, said that the U.S.-Israel-Iran conflict has led to an unprecedented shortage of fertilizer. If the shortage continues, the worst-case scenario would be no harvest at all.

“Natrual gas is the core raw material for producing nitrogen fertilizers such as ammonia and urea. The U.S.-Israel-Iran conflict has caused global natural gas prices to surge significantly. The world’s largest liquefied natural gas production facility in Qatar was attacked, which has affected the country’s LNG export capacity, and it will be difficult to restore in the short term. In countries such as India and Bangladesh, due to shortages in natural gas supply, some urea plants have been forced to reduce output or shut down. This has all led to a significant increase in global agricultural production costs. In addition, soaring oil prices will raise the costs across the entire chain of agricultural production, including farm machinery operations, agricultural product processing, and cross-border logistics. Increased shipping risks will also drive up war-risk insurance premiums and freight rates. These impacts will ultimately be reflected in the prices of agricultural products.” Zhang Jianping said. “In the first half of this year, countries with high demand for fertilizer and oil imports are expected to face risks of agricultural output reductions.”

The British newspaper The Guardian, citing remarks from Huse Soe, CEO of Yara International, a globally well-known fertilizer company based in Norway, said that the fertilizer industry is facing a “double blow”: the disruption of raw material supply from the Gulf region and the surge in natural gas prices required to produce nitrogen fertilizers will feed directly into fertilizer costs.

Conflict continues, food security risks intensify

Rising food prices will further affect downstream industries such as food processing and agricultural product processing, thereby influencing inflation in many countries

As the U.S.-Israel-Iran conflict’s effects spill over, global food security is sounding the alarm. In March, the World Food Programme predicted that if the conflict continues, global food security problems may worsen over the coming months.

Citing warnings from analysts, the Financial Times of the United Kingdom said that unlike energy markets, which can usually respond relatively quickly to geopolitical shockwaves, food production is a seasonal cyclical activity, so the response time in this sector will lag. The shockwave of heightened tension in the Middle East may not become prominent in global food supply chains until a few months later. If fertilizer production in the Gulf region continues to be disrupted and fertilizer transportation through the Strait of Hormuz remains restricted, then this year the global market may first face a fertilizer shortage, followed by a longer period in which food prices rise.

The World Food Programme and the UN Food and Agriculture Organization said that conflicts in the Middle East are adding additional pressure to an already fragile global food system. The displacement of populations, disrupted trade routes, and rising fuel costs are driving up the cost of transporting food and other supplies. Higher freight rates will increase the cost of humanitarian assistance transportation, or longer detours may be needed, which will increase transportation time. The most vulnerable countries, with the worst food security conditions worldwide, are especially affected. For example, in Sudan and Somalia, which have been battered by wars and drought, millions of people are facing severe food insecurity; if supply chains continue to be disrupted, local conditions could deteriorate further.

“At present, Brazil and India—two major global food exporters that are highly dependent on Middle East fertilizer supply—are being hit more severely. Among them, India is an important global producer and exporter of rice, and more than 40% of its urea and nitrogen fertilizers come from the Middle East; Brazil is a major global exporter of soybeans, and its fertilizer is highly dependent on imports, with about half needing to be transported through the Strait of Hormuz. In addition, Asian countries such as Thailand, Vietnam, and Cambodia are also major global rice exporters, and their fertilizer also relies heavily on imports. If agricultural production in these countries is disrupted due to fertilizer shortages, it will directly affect global supplies of major crops such as rice, soybeans, and corn, increasing potential risks such as higher food prices and imbalanced food supply, and could then trigger a new round of a global food crisis.” Zhang Jianping said.

Brazilian media reported recently that, due to cost shocks brought by the U.S.-Israel-Iran conflict, Brazilian agriculture will be one of the industries most affected. The conflict’s persistence and the possibility of regional expansion will raise the cost of the next season’s harvest, ultimately endangering the expansion of cultivated area and technology investment for the 2026–2027 crop year.

Rajun Kumar, a professor at the School of International Studies at Jawaharlal Nehru University, believes that if energy supply continues to be obstructed, India’s agricultural security and overall economic growth will face serious threats.

Maximo Torero believes that in the short term, the global food system is unlikely to face widespread shortages of staple foods, because global stocks are still relatively sufficient and most major producing areas are not directly affected by the conflict. But if the conflict continues, the affordability of food prices and the supply of agricultural inputs will face major risks, and these impacts may become evident within one to two agricultural production cycles, especially in regions highly dependent on imported fertilizers and energy.

“After the Ukraine crisis broke out, multiple global food-producing countries and oilseed-producing countries took export-restriction measures, which led to a rapid rise in global food prices and oil prices. Currently, as the Middle East conflict continues, the global energy crisis is accelerating, and the probability of a global food crisis is also increasing. In addition, rising food prices will further affect downstream industries such as food processing and agricultural product processing, thereby impacting inflation in many countries.” Zhang Jianping said.

Multiple shocks, response measures roll out one after another

More precisely control fertilizer application rates, adjust planting structures, and address short-term market imbalances in supply and demand

A recent article on the website of the Carnegie Peace Foundation in the United States said that shipping disruption through the Strait of Hormuz will trigger a chain reaction in agriculture: the first shock has already occurred—namely, fertilizer prices have skyrocketed; the second shock may appear in this year’s autumn—namely, crop yield reductions caused by high fertilizer prices; the third shock may arrive in 2027—namely, food inflation. The article argues that food is a commodity with extremely low demand price elasticity, especially so in impoverished countries, meaning that supply shocks will be almost entirely transformed into price increases.

Faced with the shocks to global agricultural production caused by the U.S.-Israel-Iran conflict, relevant countries are taking response measures one after another.

Vietnam’s Finance Magazine reported recently that to address scenarios in which Middle East conflicts become long-lasting, Vietnam’s agriculture sector is deploying a series of emergency solutions, including closely tracking developments in the conflict and trends in international logistics, and establishing early-warning mechanisms regarding transportation and payment risks. At the same time, Vietnam’s Ministry of Agriculture and Environment will step up efforts to promote trade and diversify markets, focusing on developing potential alternative markets such as East Asia, South Asia, the European Union, Africa, and Latin America.

According to U.S. media reports, demand for soybeans for fertilizer is less than that for corn. Given the current fertilizer price increases and supply uncertainty, some U.S. farmers are planning to increase the area planted with soybeans. Joseph Glauber, a senior research fellow at the International Food Policy Research Institute, said that higher fertilizer prices will affect crop choices: farmers may choose crops that require less fertilizer rather than those that need nitrogen-intensive fertilizers, in order to avoid higher input costs.

Zhang Jianping’s analysis said that the responses by agricultural producers in various countries mainly include two aspects: first, reducing fertilizer use, or replacing part of the fertilizer with organic fertilizer to control costs; but overall, a drop in crop yield per unit area is likely. Second, adjusting planting structures—for example, reducing the cultivation of corn, which requires large amounts of nitrogen fertilizer, and switching to soybeans, which have stronger nitrogen-fixing ability and consume less nitrogen fertilizer. However, this measure mainly applies to countries that have conditions for converting crop plantings. “Besides controlling fertilizer and urea application volumes more precisely, relevant countries can also make use of national food reserves and stabilize food markets to respond to short-term imbalances in market supply and demand.” Zhang Jianping said. (Reporter Yan Yu)

People’s Daily Overseas Edition (April 02, 2026, Edition 06)

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