Fertiliser Prices Surge as FAO Flags Global Food Security Risks

The organisation's director-general, Qu Dongyu, emphasised the impact of the ongoing crisis in the Gulf region on agrifood systems during his remarks to the 180th Session of the FAO Council this week.

He is calling for a coordinated policy response and outlines the FAO's proactive measures to address the situation.

Strait of Hormuz disruption sends global shockwaves

The Strait of Hormuz, at the centre of the crisis, has proven to be a critical strategic trade corridor.

Under normal conditions, it carries:

• Approximately 20 million barrels of oil per day, representing one-quarter of global seaborne oil trade; and
• Significant volumes of liquefied natural gas and fertilisers.

Following the crisis, tanker traffic through the region collapsed by over 90%, effectively closing it.

Fertiliser markets hit immediately

Qu says the fertiliser market has experienced immediate shocks, with prices for Middle Eastern granular urea rising close to 20% within a week.

By mid-April, urea prices increased by:

• 52% in the United States
• 60% in Brazil.

An estimated 1.5 to 3 million tons of fertiliser trade per month have been delayed, something the FAO says jeopardises agricultural productivity.

Impacts of the Crisis

Qu highlights four primary channels through which the conflict impacts agrifood systems:

1. Disruption of food imports: Gulf countries rely on imports for 70 to 90% of their staple food supply.
2. Rising energy prices: These increase the cost of living and food prices at the consumer level.
3. Reduced farmer margins: Rising energy and fertiliser costs squeeze farmers' profits, potentially lowering future crop yields.
4. Lower remittance flows: Households in South Asia, Southeast Asia, and Africa may face income reductions due to economic pressures in Gulf economies.

Qu says the crop calendar is central to understanding the urgency of the fertiliser crisis.

"Fertiliser applications must align precisely with planting windows that cannot be rescheduled without permanent yield losses," he says.

High Risk Countries Face Mounting Pressure

Countries heavily reliant on imports, including Bangladesh, where 53% of fertilisers come from the Gulf, face an extreme risk profile.

Iran, with a dependency on wheat and maize imports, is under severe strain.

FAO's analysis reveals that overlapping shocks from the crisis could escalate food price inflation and deepen hunger.

In Lebanon, approximately 874,000 people face acute food insecurity, while over 17 million people in Yemen experience high levels of food insecurity.

Coordinated Response Needed

"A coordinated policy response is urgently needed," Qu says.

He says that over the next 90 days, immediate measures will include:

• Developing alternative trade routes;
• Enhancing market monitoring;
• Avoiding export restrictions on energy and fertilisers; and
• Providing financial support for farmers.

In the medium term, the FAO says focus should be on diversifying import sources and supporting vulnerable countries through emergency food aid, while long-term strategies must prioritize sustainable agriculture and renewable energy investments.

In response to the crisis, the FAO has already activated several lines of action: 

• Supply chain monitoring: Real-time surveillance of shipping movements and freight rates.
• Strategic reserve coordination: Collaborating with Gulf Cooperation Council countries to prevent simultaneous panic buying.
• Alternative routing analysis: Modeling alternative corridors for perishable goods.
• Fertilizer access program: Prioritizing shipments to low-income, landlocked developing countries.

“We have the technical expertise; what we need now are the resources to act – in line with our mandate – before this closure has a catastrophic impact on our agrifood systems and on food security globally,” he says, adding that “history judges organizations not by the crises they predicted, but by the suffering they prevented.”