Fertiliser prices jumped €50-70 per ton this week.
If you’re in food and beverage, this affects you, even if fertiliser has never been on your radar.
Most business leaders track energy prices, logistics costs, and maybe even commodity futures. But fertiliser? It rarely makes the dashboard. Yet it’s embedded in almost everything you source, from wheat flour to soy protein to the corn syrup in your supply chain.
This piece explains what happened, why the EU is particularly exposed, and what it means for your sourcing and planning over the coming quarters.
The Strait of Hormuz and the fertiliser chokepoint
Here’s what happened.
Qatar shut down LNG production after Iranian drone strikes hit facilities in Ras Laffan and Mesaieed. That took nearly 20% of global natural gas supply offline in a matter of days.¹
Natural gas is the primary feedstock for nitrogen fertilisers like urea. The production chain runs: natural gas → ammonia → urea. When gas supply is disrupted, fertiliser production follows.
The Strait of Hormuz, that narrow passage connecting the Persian Gulf to open water, handles roughly one-third of global fertiliser trade.² About 52% of global urea exports come from the Middle East.³ Iran, Qatar, and Saudi Arabia are three of the world’s largest urea exporters. All three are now either offline or blocked from shipping.
During the last Iran-Israel confilct, urea prices had rallied 25-30% in days.⁴ Yet, here we are again, days before spring planting season in the Northern Hemisphere, the period when farmers need nitrogen most.
Why Europe is particularly vulnerable right now
The EU faces a combination of factors that make this disruption more significant than a simple price spike.
Import dependency changed, but not disappeared.
The EU imported approximately 4.4 million tonnes of fertiliser from Russia and Belarus in 2024, roughly 30% of total imports.⁵ Policy response came in the form of tariffs: €40 per tonne in 2025, rising to €430 per tonne by 2028.⁶
The intent was to reduce dependency on Russian supply. In practice, importers shifted toward the Middle East and North Africa, the regions now affected by the Hormuz disruption.
In December 2025, Europe saw a 140% increase in fertiliser imports compared to December 2024. In one month alone, the EU imported 2.37 million tonnes of nitrogen fertilisers – about 28% of Europe’s total annual nitrogen consumption.⁷ This was largely pre-emptive stockpiling ahead of CBAM implementation.
That stockpile provides a buffer. But it’s a finite one.
Domestic production faces structural cost pressures.
Prior to 2021, the EU produced approximately 13 million tonnes per year of nitrogen fertilisers, against consumption of about 11.2 million tonnes.⁸ On paper, the EU is roughly self-sufficient in nitrogen.
In practice, European fertiliser production depends on natural gas. And European gas prices remain 3-4 times higher than in the United States.⁹ Some EU plants that shut down during the 2022 energy crisis have restarted, but they operate on thin margins. And when gas prices spike, those margins disappear.
Carbon costs are arriving.
From January 2026, the Carbon Border Adjustment Mechanism (CBAM) applies to imported fertilisers. Rabobank estimates this will add 10-20% to ammonia costs and 10-15% to urea costs.¹⁰
Austria’s delegation to the EU Council noted in January 2026 that fertiliser accounts for 15-30% of production costs depending on the crop, and warned that “European agriculture cannot absorb further cost increases.”¹¹
The policy intent, levelling the carbon playing field between EU producers and imports, is sound. The timing adds pressure to an already constrained market.
Diversification created a different dependency
The EU tried to eliminate fertiliser risk. Instead, it redistributed it.
The previous vulnerability was dependency on Russian supply – a political risk that could be addressed through sanctions and tariffs.
The current vulnerability is a combination of dependency on Middle Eastern supply, high-cost domestic production tied to gas prices, and incoming carbon levies. These factors compound.
Most businesses assess “commodity price risk” at the category level. They track wheat prices or soy prices. Fewer trace back to fertiliser exposure by sourcing region. Fewer still map which ingredients depend on nitrogen-intensive crops, where those crops are grown, and what the fertiliser supply chain looks like for those regions.
This is where specific vulnerabilities can be missed.
From fertiliser prices to your ingredient costs
Here’s the sequence we should be watching out for:
Fertiliser costs → crop production costs → commodity prices → ingredient prices → your margins.
The timing matters here. Planting decisions made in March and April shape harvests in September. Farmers who face higher fertiliser costs, or can’t secure supply, will adjust what they plant.
Wheat and corn are nitrogen-intensive crops. A winter wheat crop producing around 10 tonnes per hectare typically requires 180-220 kg of nitrogen.¹² Soybeans, by contrast, fix their own nitrogen through symbiotic bacteria and require minimal fertiliser input.¹³
When fertiliser prices spike, the economic logic changes. Farmers may rotate toward less nitrogen-dependent crops. That’s rational for them, but it affects supply of the ingredients that depend on wheat, corn, and other nitrogen-intensive crops.
USDA projects US corn plantings will drop from 98.8 million acres in 2025 to 94 million in 2026, with soybean acreage rising.¹⁴ Similar dynamics may play out in other regions.
In France, fertiliser expenses for the 2026 wheat crop came to approximately 14% of production costs, around €29 per tonne at break-even.¹⁵ That was before this week’s price movement.
What’s likely to happen next
Grain-based ingredients will see price pressure first.
Wheat, corn, and barley are the most nitrogen-intensive crops in most F&B supply chains. As mentioned, a winter wheat crop requires ~200 kg of nitrogen per hectare.¹² When fertiliser costs increase, these crops absorb the impact directly.
Dairy and animal proteins are expected to follow with a lag, as feed costs (which include those same grains) are the largest single expense in dairy production.¹⁶ In 2022, UK dairy farmers needed over 1,900 litres of milk to buy a tonne of fertiliser – more than double the normal ratio.¹⁷
If your portfolio includes flour-based products, malt-based beverages, or dairy ingredients, these are the categories to watch first.
Expect the price pressure to hit Q3-Q4 contracts.
Research on fertiliser supply shocks shows they trigger immediate price increases at the farm level, but the lag to food prices is typically 6-9 months, aligned with planting-to-harvest cycles.¹⁸
For a March 2026 fertiliser spike affecting spring planting, the harvest comes in September. That’s when the higher input costs crystallise into commodity prices. Contract renegotiations for Q4 delivery will reflect this.
Companies reviewing supplier agreements in Q2 should factor this timing into their assumptions.
Mid-sized buyers will feel this more than large corporates.
When supply tightens, large buyers with volume commitments tend to get priority. They have leverage to push back on price increases and access to market data that lets them challenge supplier claims.
Mid-sized manufacturers are the “squeezed middle” caught between higher input costs from suppliers and pressure from retailers to hold prices.¹⁹ Large corporates can absorb short-term margin compression or pass costs through. Smaller players have less exposure. The mid-tier is where supplier price increases land hardest, and where the lack of documented escalation criteria becomes most costly.
If you’re in that middle tier, this is the moment to invest in visibility.
Three questions to start with
1. Where’s your nitrogen exposure?
Which ingredients in your portfolio depend on nitrogen-intensive crops? Where are those crops grown? What’s their fertiliser source?
Most procurement teams can answer the first question. Fewer can answer the second and third.
2. What are your suppliers seeing?
Rather than waiting for price movements to show up in contracts, it’s worth asking now:
- What are they planning for Q3 pricing?
- What are they seeing in their input costs?
- What risks are they tracking that haven’t made headlines yet?
3. What assumptions are in your contracts?
Fixed-price agreements assume stable input costs. Worth checking:
- What triggers allow for price adjustments?
- What’s your exposure if a supplier invokes force majeure?
- Are there terms that assume “normal” market conditions?
Conclusion
Fertiliser isn’t a headline commodity. But it’s embedded in most of what food and beverage companies source.
The disruption in the Middle East is real. The EU’s structural position, caused by import dependency, high domestic production costs, incoming carbon levies amplifies the impact. And the timing, at the start of the Northern Hemisphere planting season, means the effects will impact the harvests later this year.
Most sourcing teams don’t track the line from shipping route to fertiliser price to ingredient cost. By the time it surfaces in a supplier conversation, the leverage has already shifted.
If you’re not sure how prepared your supply chain is for this kind of disruption, I built a short diagnostic to help you find out. It takes 5 minutes and shows you where the gaps are before they become expensive.
And if you want to keep building on this, follow me on Linkedin where I go deeper into closing the gap between sustainability commitments and the systems that deliver them.
Sources
- Reuters, “Qatar LNG, Saudi refinery, Israeli oil, gas fields down due to Mideast strikes,” 2 March 2026
- Reuters, “Iran war threatens Asia fertiliser supplies ahead of planting season,” 5 March 2026
- DTN/StoneX, “DTN Retail Fertilizer Trends: If Iran Closes Strait of Hormuz It Could Affect Urea Movement,” 25 June 2025
- Profercy analysis, “Israel-Iran conflict leads to urea supply woes; global fob values rally by 25-30%”, 20 June 2025
- SunSirs, “Key Events in the Global Fertilizer Market in 2025,” 12 January 2026
- European Parliament, “Parliament approves new tariffs on Russian and Belarussian agricultural goods,” 22 May 2025
- Fertilizers Europe, “Statement on CBAM’s impact on EU fertilizer import market,” 16 February 2026
- World Fertilizer, “Meeting fertilizer demand in Europe,” 9 October 2025
- QC Intelligence, “Deep Dive: Europe’s ammonia feedstock costs to remain high in 2025,” 6 February 2025
- Mivena, “Fertilizer Market Outlook 2026,” 4 November 2025
- Austrian Council delegation note to EU Agriculture and Fisheries Council, 20 January 2026
- Teagasc, “Winter Wheat Nitrogen Recommendations”; Yara, “Wheat quality: Caring for both proteins and the environment”
- Missouri Soybeans, “Nitrogen Fixing”; SDSU Extension, “Chapter 23: Nitrogen Fixation”
- Reuters, “US farmers to sow more soybeans in 2026, less corn, USDA says,” 19 February 2026
- Argus Media, “Shake-up in EU fertilizer pricing to hit farmer costs,” 5 January 2026
- Teagasc, “Dairy production costs and projections 2022-2023”
- AHDB, “How has volatility in key input costs such as fertiliser and feed impacted the dairy market?”, 12 March 2024
- Morão, H. “The economic consequences of fertilizer supply shocks,” Food Policy, May 2025
- EFFP, “Food manufacturers becoming ‘squeezed middle’ as prices remain high,” December 2023
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