The disruption to fertiliser trade, higher fuel prices, logistics imbalances and the resulting increase in production costs are among the main effects of the conflict triggered by attacks by the United States and Israel against Iran.
The crisis comes on top of tensions caused by the war in Ukraine and a year of extreme heat that is also affecting agriculture.
Persian Gulf region accounts for between 30% and 35% of global urea exports and between 20% and 30% of ammonia exports, while around 30% of global fertiliser trade passes through the strategic Strait of Hormuz, where traffic has been brought to a standstill.
A prolonged impact
The Organisation for Economic Co-operation and Development (OECD) and the UN Food and Agriculture Organization (FAO) have warned that the conflict will lead to a decline in agricultural production in 2026 and 2027, as well as higher prices.
Raymond Torres, Director of Economic Analysis at the Spanish Savings Banks Foundation (Funcas), told EFE Agro that the “full” impact of the war is “yet to materialise”.
He explained that the effects have so far been more limited in the Northern Hemisphere because farmers had already purchased part of the fertilisers needed for planting earlier in the year, while increased production in China has also helped offset some of the disruption.
However, Andrés Góngora, Secretary General of the farmers’ organisation COAG, told EFE Agro that the crisis has been more acute in Spain and the European Union because domestic fertiliser production has gradually been dismantled, while manufacturing capacity has recovered in countries such as the United States, Egypt and Argentina.
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Torres points out that, if the conflict continues, the risk will be “asymmetrical”, depending on each country’s reliance on the flow of agricultural products and inputs through the Strait of Hormuz.
According to the World Trade Organization (WTO), Gulf countries would be among the most affected.
In Asia, rice harvests could decline because of the region’s heavy dependence on fertilisers shipped through Hormuz.
In Africa, where both food and fertilisers are imported, there is a risk of disproportionate falls in harvests and greater food insecurity. Latin America could also suffer production losses despite being a net agricultural exporter.
The wars in Iran and Ukraine
Another risk is the overlap between the fertiliser “shock” and renewed escalation in the Black Sea, together with restrictions on supplies of Ukrainian or Russian grain, according to the Funcas expert.
This combination of geopolitical conflicts is already being reflected in markets this week, particularly in Europe, according to agricultural market analysis agency Agritel.
There is also a further trade risk. Since the closure of Hormuz, barriers affecting fertiliser trade have increased to cover 15% of global exports, according to WTO data cited by Torres.
Concerns over food prices
Funcas data indicate that the impact of the war on food inflation in Spain has so far been less significant than initially expected. However, the rise in energy prices following the failed ceasefire agreement, combined with wildfires and extreme weather, poses a risk to the cost of the shopping basket in the coming months.
Góngora, meanwhile, argues that food sovereignty “also involves fertiliser production” and welcomed the fact that the crisis has prompted both the Spanish Government and the European Union to promote plans aimed at strengthening domestic production.
COAG has acknowledged the support measures introduced by the Government to mitigate the consequences of the conflict, but says there are still “gaps” in the schemes. With energy prices continuing to rise and the war ongoing, the organisation believes it may become necessary to request a second package of support measures.
