Middle East conflict disrupting fertilizer supply may lead to persistent food inflation

The escalating Middle East military conflict triggered a global agricultural crisis as supply blockades in the Persian Gulf caused essential fertilizer prices to skyrocket.

World Bank data showed the real economic impact of the conflict became increasingly apparent across global food networks as the overall agricultural price index rose 1.5% and food prices climbed 2.7% in March.

The global fertilizer market absorbed a 26.2% price shock driven mostly by a 53.7% rise in the cost of urea.

Yener Ataseven, an agricultural economics professor from Ankara University, told Anadolu the crisis stems from the ongoing blockade of the Strait of Hormuz.

Ataseven said the waterway accounts for 30% to 35% of the world’s oil supply and roughly 20% of the world’s liquefied natural gas (LNG).

LNG is used in manufacturing nitrogen-based fertilizers such as urea and diammonium phosphate (DAP).

“The 15-day ceasefire process shows very clearly where the US started with this war, where it arrived, and where it hit a roadblock,” Ataseven said.

He noted that the temporary ceasefire means little to the economy if Iran continues to maintain restrictive control over maritime trade via the strait.

The geopolitical bottleneck already impacted farmers during the spring planting season as the cost of essential agricultural fertilizers rose roughly 10% in 40 days in Türkiye.

“There’s no sector without agriculture — while Iran, Israel, and the US are at war in the region, everything they eat and drink is agricultural products,” Ataseven added.

He stated that these developments beget a dangerous economic chain reaction since rising input costs prompt farmers to use less fertilizer.

Reducing crop yields leads to scarcity and inevitably drives up the cost of basic field crops, vegetables, and livestock forage.

These costs will eventually be passed onto consumers via sustained and long-term food inflation.

“Will the drop in Brent crude prices have the same downward effect in the short term? I think not,” he noted.

Ataseven added that thinking fertilizer and food prices which rose sharply in the short term will decline just as sharply when the conflict subsides goes against economic principles.

*Writing by Emir Yildirim