How the Strait of Hormuz Disruption Is Raising Fertilizer Costs and Food-Price Risks

The Strait of Hormuz disruption is no longer only an oil-and-shipping story. It is constraining the movement of fertilizer inputs and raising the cost of energy, freight and agricultural production—creating a risk that today’s supply-chain shock becomes tomorrow’s food-price pressure.

Commercial traffic fell sharply after U.S.–Israeli strikes on Iran on February 28, when Iran declared the strait closed and shipping companies suspended voyages. By September 4, only four commodity vessels transited the waterway, compared with roughly 125 large commercial vessels a day before the conflict. That is far from a return to normal trade, even where limited movements continue.

Why Hormuz matters to agriculture

The strait is a crucial outlet for Gulf-produced energy and fertilizer materials. The FAO estimates that around 1.3 million tonnes of fertilizer per month can no longer move through the corridor and says there are no viable land-based alternatives for these shipments. It identifies major Asian importers—including China, India, Japan and the Republic of Korea—as among those most exposed to tighter fuel supply and higher energy prices. 18

The agricultural impact works through several linked channels:

• Nitrogen fertilizer: Urea depends heavily on natural gas as a feedstock. About one-third of globally traded urea normally moves through Hormuz, so reduced Gulf gas and fertilizer flows can tighten availability and raise costs. 17
• Phosphate fertilizer: Sulphur is used to make sulphuric acid, a key input for phosphoric acid and phosphate fertilizers. When sulphur is scarce or expensive, costs move quickly through to DAP and NPK products. 14
• Farm operations: Higher fuel and shipping costs raise the expense of moving inputs and running farm machinery. Those costs may be absorbed by fertilizer producers, governments or farmers at first, but can eventually feed into crop prices.

The key timing issue is that fertilizer scarcity does not necessarily show up in food prices immediately. It affects purchasing decisions and application rates before planting or during the growing season, which can reduce margins or yields later.

Sulphur has become the immediate bottleneck

Sulphur has been one of the clearest price signals from the disruption. Market reporting put spot prices above $1,000 per tonne in September, more than 300% above August 2025 levels, although the precise increase varies by benchmark and location. 4 Argus assessed freight for a large sulphur shipment to India’s east coast at $140–142 per tonne in late August, implying a delivered price of roughly $1,100 per tonne. 5

That matters because sulphur is not a marginal input for phosphate producers. Higher sulphur costs raise phosphoric-acid costs, which in turn make phosphate fertilizers more expensive. India’s benchmark phosphoric-acid contract price for July–September was reported at $1,700 per tonne of P₂O₅ CFR, 25% above the previous quarter. 11

Supply disruption, rather than price alone, is the more serious problem. A buyer may be able to pay more for a cargo; it cannot easily replace cargoes that cannot safely or economically move through the usual route.

India shows the commercial and fiscal pressure

India’s response illustrates the difficulty of procuring essential inputs in a disrupted market. India Potash Limited issued a collective tender on behalf of eight companies for 593,500 tonnes of sulphur for June–August delivery: 527,500 tonnes for the east coast and 66,000 tonnes for the west coast. 7 It later scrapped the tender. Offers for the east coast were high, and no full cargoes were offered for the west coast. 8

The episode does not prove that the full requested volume was unavailable across all channels. It does show that normal price discovery and shipment planning had broken down for a major importer.

The fiscal strain is also significant. India had spent about ₹99,000 crore, or roughly 56% of its annual fertilizer-subsidy budget, in the first four and a half months of FY2026–27, amid elevated global fertilizer-product and LNG prices. India had already approved Nutrient Based Subsidy rates for phosphatic and potassic fertilizers for the 2026 Kharif season, designed to help keep these products available at affordable prices.

Additional emergency support reported for fertilizer producers should be distinguished from approved policy: a draft support proposal is not the same as enacted aid. 1

Why Asian food-security risks are rising

The most immediate exposure is among import-dependent countries and producers. Higher input costs compress farm margins first, particularly where farmers have limited cash reserves or cannot pass costs through quickly. If fertilizer purchases are delayed, reduced or substituted with less suitable products, the consequences can extend into later harvests.

For Southeast Asia, the disruption combines fertilizer vulnerability with broader dependence on imported fuel. Research on ASEAN food resilience describes a “double-whammy”: tighter fertilizer supply alongside higher energy costs for fertilizer production, transport and farming. Singapore is fully dependent on imported fertilizers, while regional food systems also depend on cross-border trade and shipping.

The threat should not be overstated as a one-cause explanation for all food inflation. Weather variability, transport costs, other maritime disruptions and local currency or policy conditions also shape food prices. Hormuz is best understood as a powerful amplifier: it makes existing agricultural vulnerabilities more expensive and harder to manage.

What a practical regional response looks like

ASEAN leaders have proposed a regional fuel stockpile and a standby food-security arrangement in response to the prolonged disruption. Those measures can help, but food stocks alone do not solve an input shortage that begins months earlier on farms and in fertilizer plants.

A more durable ASEAN–India response would focus on the supply chain before food prices rise:

1. Coordinate fertilizer procurement and strategic input stocks. Joint purchasing and transparent inventory data could improve bargaining power and reveal shortages earlier.
2. Build emergency shipping and insurance arrangements. Freight and war-risk costs can block trade even where physical supplies exist.
3. Diversify suppliers and routes where possible. Alternative sourcing cannot fully replace Gulf volumes quickly, but it can reduce concentration risk.
4. Improve fertilizer efficiency. Better nutrient management can reduce exposure to costly inputs without simply cutting application rates.
5. Link energy planning to food-security planning. Gas, diesel, freight and fertilizer are connected costs, not separate crises.

The bottom line

The Hormuz disruption has exposed how closely global food production depends on a narrow maritime corridor. Restricted shipping has removed or delayed fertilizer and energy supplies, pushed sulphur to exceptionally high price levels and raised procurement and subsidy pressures in India. 48

The most consequential effect may arrive with a lag. If expensive or unavailable fertilizer reduces application or weakens producer finances, the impact can move from ports and commodity markets into harvests and household food bills. Keeping fertilizer supply chains functioning—not only managing food inventories after a shock—will be central to limiting that risk.