A severe fertilizer shortage sparked by the Iran war is affecting US farmers, with 70% of respondents in an American Farm Bureau Federation survey saying they couldn’t afford all the fertilizer they needed this season.
The war has disrupted global fertilizer shipments, causing prices to rise and availability to plummet, with the Strait of Hormuz becoming a shipping chokepoint. Before the war, around one-third of the world’s fertilizer transported by sea passed through the strait.
Fertilizer Shortage Impacts
US farmers are feeling the pinch, with high fertilizer prices and limited availability hitting them just as they decide what to plant for the upcoming growing season. The shortage has also created a global shortage of natural gas, a key component in nitrogen fertilizer manufacturing.
According to Chris Barrett, a professor of agricultural economics at Cornell University, consumers may see higher food prices come September to January, but this will not be directly attributable to fertilizer costs. Instead, food inflation is driven by larger factors like labor and fuel costs.
About one-third of the fertilizer used by US farmers is imported, and although little of it comes through the Strait of Hormuz, the global market is impacted, says Christopher Glen, Vice President of Public Affairs at The Fertilizer Institute.
Future Implications
Some farmers are opting to plant crops that require less nitrogen fertilizer, such as soybeans, in response to rising costs. USDA data shows that farmers are expected to plant 95.3 million acres of corn this year, down from 98.8 million acres last year, while soybean acreage is predicted to rise.
If higher fertilizer costs lead to smaller harvests, this could contribute to modest retail price hikes. Experts say the costs of the fertilizer shortage will be largely shouldered by farmers, who spend a significant portion of their operating costs on fertilizer, particularly for crops like corn and wheat.
The fertilizer shortage serves as a reminder of the complex and interconnected nature of the global food system, where events in one part of the world can have far-reaching consequences for farmers, consumers, and the economy as a whole.
