Food prices likely to rise as fertilizer exports out of the Middle East are disrupted, experts say

Americans are feeling the impact of the conflict in Iran when they fill up their vehicles, but they’re likely to see it on their grocery bill as well in the coming months.

The region is also one of the largest suppliers of nitrogen fertilizer, which is critical to modern farming. As American farmers are starting the growing season, they’re being faced with large increases in the cost of farming. As a result, the nation’s food supply could be impacted by farmers reducing acreage or producing lower yields.

Traffic moving through the Strait of Hormuz, a thin waterway connecting the Persian Gulf and Arabian Sea through which 20% of the world’s petroleum is exported, has been reduced to a trickle as a result of the conflict.

“There were a lot of farmers taking losses on crops last year, probably this year again. So it’s something that needs to be addressed at probably all levels,” Arthur Erickson, CEO of agriculture drone manufacturer Hylio, told Just the News.

Natural gas converted to plant fertilizer

Nitrogen fertilizer starts out as natural gas, and through the Haber-Bosch process, the gas is converted into ammonia. The ammonia is then made into urea and other nitrogen products. Writing in Forbes, Robert Rapier, a chemical engineer, said that “nitrogen fertilizer is natural gas transformed into plant food.”

Approximately half the global food production depends on synthetic fertilizers, and without it, yields will sharply decline. Countries that are impacted by the trade disruptions in the region around the Strait of Hormuz produce nearly half of the global exports of urea and 30% of the global exports of ammonia.

American farmers are starting early field preparation and initial fertilizer applications. They’ve already planned out what they’re going to plant and calculated the inputs they’ll use this year. This means their ability to make adjustments is limited.

Farmers are experiencing a lot of fatigue

Since the conflict in Iran began at the end of February, prices for urea rose 25%, according to economist Dr. Faith Parum of the American Farm Bureau.

Erickson said that the recent increases are just part of a series of hits farmers have taken in the past several years. First, there was the COVID pandemic and the resulting inflation. Then, the Russian invasion of Ukraine drove up fertilizer prices. Tariffs over the past year have impacted the price of many inputs farmers import, and now they’re again facing steep increases in fertilizer prices.

Farmers are experiencing a lot of fatigue as these problems get piled on their shoulders, Erickson said. To deal with this, they’re cutting back on acreage and taking other steps to try to keep the farm going. “They can’t make it pencil out,” Erickson said.

Not just a farm issue

Zippy Duval, president of the American Farm Bureau, said American farmers today are operating in one of the toughest economic environments farmers have ever faced.

“We’re experiencing a generational decline in farm income driven by out-of-control inflation and declining crop prices. Now we’re seeing additional pressures from disruptions in the global fertilizer supply routes that flow through the Strait of Hormuz,” Duval said in a recent Farm Bureau briefing on the fertilizer situation.

The fertilizers, he explained, aren’t optional for farmers. They determine crop yield and ultimately the American food supply. “It’s not just a farm issue. It’s a food security issue and an economic issue for the entire country. When farmers face supply shortages or major price increases, those impacts ripple through the entire food chain,” Duval warned.

Farms also use a lot of diesel, and prices rose over $5 per gallon for the first time since 2022, according to AAA. A month ago, prices were less than $3.75 per gallon.

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