Farmers warned fertiliser prices could rise amid Middle East tensions

Escalating conflict in the Middle East could disrupt global fertiliser supplies and drive up costs for farmers worldwide.

The warning follows air strikes on Iran on 28 February that have contributed to the de facto closure of the Strait of Hormuz, a key global shipping route for fertiliser raw materials.

Around 25% to 35% of global trade in fertiliser raw materials passes through the Strait of Hormuz, meaning any prolonged disruption could significantly affect the global fertiliser supply chain.

Analysts warn that a continued closure of the route could increase production and transport costs for fertiliser manufacturers.

Any disruption could push fertiliser prices higher at a time when many farmers are already facing rising input costs.

The Middle East is a major producer of ammonia and nitrogen, key ingredients used in many fertilisers essential for crop production.

A tightening global supply of nitrogen fertilisers could have ripple effects across agriculture, potentially affecting fertiliser availability and prices for growers.

Producers in North America and Russia could benefit if global nitrogen supply tightens.

However, rising crude oil prices and higher freight costs are likely to offset some of these potential gains.

Andrea Petroczi-Urban, assistant vice president of European corporate ratings, said fertiliser prices could rise if disruption continues.

“In our view, major U.S. fertilizer producers may see improvements in revenue as the result of higher prices and market share from supply chain reorganization if the situation persists,” she said.

However, fertiliser companies that rely on Middle Eastern natural gas feedstock could face operational challenges if production or transport routes are disrupted.

“On the other hand, we expect fertilizer-producing companies reliant on Middle Eastern natural gas feedstock to face some challenges in production and transportation, which could result in lower profitability.”

The potential impact could extend beyond fertiliser markets and into global food production.

Lower fertiliser use generally leads to reduced crop yields, which could add further pressure to global food prices if production declines.

The UK relies heavily on imported fertiliser and raw materials to support crop production, meaning farmers could be particularly exposed to supply disruptions.

Analysts say the fertiliser and agriculture sectors will be closely watching developments in the region as tensions continue to evolve.