Iran war causes fertilizer prices to rise worldwide

This is according to Philipp Spinne, Managing Director of the German Raiffeisen Association (DRV). This is similar to the situation in February 2022: "The world market prices for nitrogen fertilizer are getting closer and closer to the peak level we had at the beginning of Russia's war of aggression against Ukraine," says Spinne.

In Europe, the effects have not yet been felt directly by consumers. This is because many farmers had already bought their fertilizer for this spring before the war began, according to a spokesperson for the Bavarian Farmers' Association. Switzerland obtains most of its fertilizer from neighbouring European countries.

Four years ago, the threat to global food security feared by some experts did not materialize. One of the reasons for this was that Russia - one of the world's most important fertilizer producers - benefited from the attack on its neighbor and increased its fertilizer exports. In the meantime, the EU has decided on gradual tariff increases for Russian nitrogen fertilizer. This week, Russia itself restricted fertilizer exports for the time being to protect its own farmers.

Fertilizer price depends on gas prices

But why do wars cause fertilizer prices to rise worldwide? This is due to the high energy requirements of production: "Gas prices determine between 80 and 90 percent of the costs of ammonia and nitrogen production," says a spokesperson for the German Agricultural Industry Association. So if gas becomes more expensive, fertilizer prices automatically rise too. And if farmers use less fertilizer, this results in crop losses.

And what is the potential danger for food production? In a paper published in 2008, Dutch environmental scientist Jan Willem Erisman and several colleagues calculated that one hectare of arable land now produces twice as many crops as at the beginning of the 20th century, and 48 percent of the world's population owes its food to the global use of mineral fertilizers.

An estimated one third of the urea traded worldwide and around twenty percent of ammonia passes through the Strait of Hormuz. The direct impact on Europe is minimal: "Europe has hardly purchased any fertilizer from the conflict region for years," according to the German Agricultural Industry Association.