Soaring fertiliser prices due to the disruption in the Middle East have already impacted food production in Africa and Asia, and could have lasting effects for years to come, experts have warned.
Prior to the conflict, the Strait of Hormuz carried 20-30% of global fertiliser exports, as well as a significant share of crucial inputs such as sulphur and urea, according to UN estimates.
But while other commodity flows affected by the closure of the Strait have partially rebalanced, there has been “no equivalent fertiliser export offset”, said a May 29 report by market intelligence firm Kpler.
“This is both a planting story and a yield story that will play out across both hemispheres through the second half of 2026,” it said. “Yield implications of higher fertiliser prices may be more widely seen for the 2027 crops.”
Tedd George, founder and chief narrative officer at Africa-focused consultancy Kleos Advisory, said the immediate impact on the agricultural sector is likely to be “a drop in yields across the board”.
“The main agricultural season typically starts in May or June in the southern hemisphere,” he said. “Some farmers had already bought some fertiliser, but anecdotal evidence is that prices are two to three times what they were this time last year. It’s disastrous.”
George said Kenya, Tanzania and South Africa will be directly affected, as they have historically sourced a large proportion of fertiliser from Saudi Arabia and the UAE.
In addition, Kenya typically acts as an arrival point for imports that are then distributed elsewhere within the continent, creating a knock-on effect in other nations, he added.
“This is something that has a long tail,” he said. “Even if the Strait of Hormuz opened today, the impact is going to roll on for quite a while, and I think the reality is we’re going to see local prices for certain foodstuffs really increase.”
Abhishek Wadekar, founder and chairman of Dubai-based agricultural commodity trader Naviferts, said cost rises have also affected Asia’s imports from the Middle East.
“During the last three months, prices have been four to 10 times higher, depending on which product is coming from which area,” he said. At the same time, freight costs that used to be US$3-5mn “are now US$25mn”.
“That cost is going to be passed onto the manufacturers, and the manufacturers are going to pass it onto the end consumers and farmers, who can only buy at these high prices,” he said.
“The problem is farmers will not get much of a return from the field, as they cannot increase their prices proportionally.”
Máximo Torero Cullen, chief economist at the UN Food and Agriculture Organisation (FAO) warned in a June 3 article that decisions taken by farmers now “will shape global food production through 2027”.
“They need to reduce fertiliser use and accept lower yields, shift to alternative crops, or absorb much higher costs and risk financial collapse,” said the article, which was published by the Council on Foreign Relations.
Fears over food security have prompted support from developing finance institutions.
GTR revealed last month that the volume of financing deployed by the Asian Development Bank has risen 50% year-on-year as a result of the Middle East crisis, providing US$600mn towards food security-related deals.
However, higher prices mean traders have to secure more financing from their bank partners.
“Traders like us have limited fund arrangements and limits,” Naviferts’ Wadekar said. “With the kind of volatility and the big numbers we’re seeing, you need more credit lines to cater to the same quantity in the market.”
George of Kleos Advisory adds that banks may be wary of financing shipments where there is logistical uncertainty, particularly if they are taking security over the goods.
“Once the fertiliser has landed at the port or at the warehouse, importers should be able to get financing from the banks, because they can take security over the goods,” he said. “Before that, it probably means importers are going to have to self-finance part of the supply chain.”
