The war in the Gulf could cause a global food shock

On March 22, the Nadab slipped through the Strait of Hormuz and into the Arabian Sea. She was carrying precious cargo: 20,000 tonnes of fertiliser from an Iranian port, destined for South-East Asia.

Since America and Israel attacked Iran on February 28, the Islamic regime has allowed just six ships laden with the stuff to sail out of the Gulf, a quarter of what would have been expected over the period. The Nadab was the last.

The third Gulf war is worrying the world’s farmers. A third of seaborne fertiliser exports come from the region; most have been stopped by Iran’s blockade.

Urea, the most widely used of the lot, is around 70 per cent dearer than before the war; ammonia, another nitrogen fertiliser, is 39 per cent pricier.

Madeleine Overgaard of Kpler, a data provider, reckons nearly 1.9m tonnes of plant nutrients are stuck on board 41 ships that cannot leave the Gulf — equal to 12 per cent of all the fertiliser shipped out of the strait in 2024.

Getting them moving matters. In parts of the northern hemisphere the planting season has begun. In India it is less than two months away.

“The timing is so important,” says Máximo Torero, the chief economist of the Food and Agriculture Organisation, a UN agency.

Some farmers, such as wheat growers in the American Midwest, are switching to crops that do not need as many nutrients, such as soyabeans. Those who cannot will use less fertiliser, pushing down yields, or not plant as much.

So far markets for food commodities are subdued. In 2022, when one giant grain exporter (Russia) invaded another (Ukraine), the price of wheat surged by 50 per cent.

When the Iran war began it rose by just 4 per cent and has not moved much since.

This price reflects what has already been harvested: last year’s crop was good and, unlike four years ago, is not trapped by conflict. Unlike Ukraine, the Gulf is no breadbasket.

But problems will stack up. Wheat prices are a fifth below where they were in early 2022, before the Ukraine war, giving farmers less room to absorb the rising cost of fertiliser and fuel. If harvests are disrupted in the second half of the year, price increases will follow.

Poor countries are especially vulnerable to the fertiliser shock. Kenya, Madagascar, Mozambique and Zambia get more than a third of their nitrogen fertilisers from the Gulf.

In South Asia, smallholders use oodles of the stuff to eke out as much output as possible from their modest plots.

Big food exporters like India and Thailand get about 35 per cent of it from the Gulf. Bangladesh, which often has to import grain from India, gets more than half.

Because fertiliser is bulky, perishable and (usually) cheap, most farmers buy it when they need it, rather than keeping stockpiles.

That has left the market with few buffers — and caused a scramble for supplies.

On April 2 Bloomberg reported that India’s government was in talks with producers in Russia and China, among others, to procure shipments.

But Russia’s plants are operating at close to capacity, partly because of Ukrainian drone strikes on its facilities, and the Kremlin has partly suspended exports. China has released some reserves for its own farmers and is restricting sales abroad.

Making more fertiliser at home is hard, too.

Natural gas, which typically makes up more than two-thirds of fertiliser’s production costs, is nearly 70 per cent as expensive as it was in February.

Slovakia’s biggest plant has cut its output of ammonia by 15 per cent. India’s fertiliser factories, which typically buy lots of gas in liquefied form from the Gulf, are working with 70 per cent of the fuel they would normally have.

In Bangladesh, likewise dependent on Middle Eastern imports of feedstock, four out of its five fertiliser factories have shut.

Availability of hydrocarbons is a problem beyond raising fertiliser prices. Combine harvesters and water pumps guzzle diesel, the price of which has also increased sharply.

In America farmers shelled out $10 billion for it in 2024, around 64 per cent of their aggregate spending on fuel.

Figures from 2014, the latest available, suggest that in India they buy around 10 per cent of all diesel sold in the country.

Petrochemicals stuck in the Gulf are also driving up the cost of plastic bags, wraps and films that farmers use. Polyethylene costs more than at any point since 2022. All this distresses the UN’s Food and Agriculture Organisation.

Food prices are hard to predict. But estimates from the Kiel Institute, a German think-tank, are dire.

Its researchers calculate that prices could rise by more than 10 per cent in India, Pakistan, Sri Lanka and Taiwan. In Zambia they could shoot up by 30 per cent.

The World Food Programme, another UN agency, has said that a prolonged war could raise the number of people in acute hunger by 45 million, to 363 million.

In recent days Iran has let some Iraqi tankers through.

The UN is working on a deal to allow fertiliser to leave the Gulf, modelled on one that got Russian and Ukrainian grain out of the Black Sea in 2022-23. But any agreement looks a way off.

The waterway remains shut to all but a few vessels. The Nadab’s cargo will not forestall a crisis.