A worker spreads fertilizer after planting potatoes at Bluff View Farms in West Jefferson, North Carolina, reflecting the challenges faced by farmers amid rising fertilizer prices exacerbated by global events. High fertilizer prices imperil farms already besieged by severe weather, tariffs, and costly fuel and labor.
When hostilities involving Iran unfolded, concerns arose over oil shipment slowdowns, but another key export—fertilizer—was critically affected. The Strait of Hormuz previously facilitated about one-third of global sea-transported fertilizer, according to UN Trade and Development. Its closure led to a significant drop in shipments from the Persian Gulf and an increase in fertilizer prices, impacting countries reliant on imports.
The war led to a global scarcity of natural gas, indispensable for producing nitrogen fertilizer, creating hurdles for U.S. farmers facing higher prices and limited availability as they planned for the upcoming growing season. Meanwhile, food system experts predict modest impacts on retail prices due to factors like labor shortages and high fuel costs, which are larger drivers of food inflation.
The Fertilizer Institute states that one-third of U.S. farmers’ fertilizer supply is imported, with little from the Strait of Hormuz. Christopher Glen of TFI noted the global market dynamics still affect U.S. agriculture due to the reduction in available fertilizer in the market.
“Even if those tons from the Mideast aren’t coming to the US, they are still tons that have been removed from the market and need to be made up elsewhere. That’s where the pressure comes from,” Glen explained.
The war’s effects led to farmers adjusting their planting strategies, with corn and wheat producers facing heavy reliance on expensive fertilizers. A National Corn Growers Association survey found many farmers won’t apply the full amount needed due to costs and access, prompting some to plant soybeans needing less nitrogen fertilizer than corn.
Reports indicate a reduction in corn planting to 95.3 million acres from 98.8 million, while soybeans are expected to rise to 85.4 million acres from 81.2 million. While higher fertilizer expenses may contribute to smaller harvests and minor retail price inflation, the weight falls mainly on farmers.
USDA data reveals that only 12% of each consumer dollar spent on food goes to farms. Other costs are absorbed by transportation, processing, and retail components. In 2024, U.S. farms spent about 7% of their budgets on fertilizers, though crops heavily dependent on fertilizers like corn incur larger expenses. Rob Vos from the International Food Policy Research Institute noted farmers have limited leverage in negotiating crop prices with wholesalers.
Projections from TD Economics suggest a modest impact of 0.1-0.5 percentage points on food inflation in North America with a 2-5% production shortage by 2027. However, broader economic pressures are deemed more influential in affecting food prices.
In less-developed regions such as Africa and Asia, the fertilizer shortage may bear severe consequences, dampening the agricultural prospects of countries like Sudan, Sri Lanka, Tanzania, and Somalia, as highlighted by Jorge Moreira da Silva of the UN Office for Project Services.
Despite recent fertilizer price declines following a U.S.-Iran agreement to reopen the Strait of Hormuz, challenges remain. The Trump administration’s temporary suspension of specific duties aims to alleviate costs, though resumption of normal production may take time.
Rob Vos noted the potential shift in farmers’ strategies towards alternative soil nourishment methods like manure, compost, and cover crops amidst enduring price volatility.
“You see more farmers interested in other ways of replenishing soil nutrients as the price of fertilizer has gone up,” Barrett remarked.