FAO warns trade shock may raise fertilizer costs and cut crop yields worldwide
The Food and Agriculture Organization (FAO) has warned that disruptions in the Strait of Hormuz are creating a major shock to global agriculture and food systems. “This is not only an energy shock. It is a systematic shock affecting agrifood systems globally,” said Chief Economist of the Food and Agriculture Organization of the United Nations (FAO), Máximo Torero.
Tanker traffic through the Strait has dropped sharply, cutting off a key route for oil, natural gas, and fertilizers. This trade corridor normally carries a large share of global energy supplies and fertilizer inputs, including sulfur, which is essential for producing phosphate fertilizers.
As shipping declines, costs are rising rapidly. Insurance premiums for vessels have increased significantly, making transport more expensive and risky. Even if conditions improve, normal trade operations could take months to recover.
Farmers worldwide are already feeling the impact. Fertilizer prices have increased sharply, with urea prices rising in key regions. Since fertilizer production depends on natural gas, higher energy prices are expected to keep costs elevated. FAO estimates that fertilizer prices could remain 15% to 20% higher in early 2026.
Higher costs are forcing farmers to make difficult decisions. Many may reduce fertilizer use or switch to crops that require fewer inputs. However, even small reductions in fertilizer use can lead to large drops in crop yields, especially in regions with already low usage.
The length of the disruption will be critical. A short crisis may have limited effects, as global food stocks remain stable. However, a longer disruption could affect planting decisions and reduce production of major crops like wheat, rice, and maize.
Countries such as India, Bangladesh, Sri Lanka, and Egypt are particularly vulnerable due to their reliance on imports and seasonal crop cycles. African nations and major exporters like Brazil could also face challenges.
FAO is calling for urgent global action. This includes creating alternative trade routes, supporting farmers financially, and investing in sustainable farming methods for the future.
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