About two years, I wrote a blog that looked at the level of concentration in global fertilizer markets, and how that matter was drawing the serious scrutiny of U.S. policymakers for the first time (https://www.agweb.com/opinion/concerns-grow-over-concentration-u-s-and-global-fertilizer-markets). That blog came about a year after Russia’s invasion of Ukraine, which disrupted global fertilizer trade due to sanctions being placed on Russia and its close ally, Belarus. Prices had fallen considerably since their peak immediately after the invasion, but were still somewhat elevated.
Fast forward to April 2026, where we again see global fertilizer trade flows (and prices) disrupted by conflict. Shortly after the joint U.S. and Israeli attack on Iran in late February, that country retaliated by imposing restrictions on ship traffic through the Strait of Hormuz. The impact on global oil, natural gas, and gasoline prices of that action was almost immediate. The Brent crude oil price was about $63 per barrel on February 27, 2026, and jumped to as high as $113 per barrel on March 20, though that price has fallen somewhat over the last few weeks with the uneasy ceasefire between the U.S. and Iran that is currently in place.
What was less well known to the general public at the time was the important share of global fertilizer trade, particularly nitrogen-based products, that also typically moves through the Strait of Hormuz. In recent decades, starting in the mid-1970’s, Iran, Qatar, Saudi Arabia, the United Arab Emirates, and Oman have become significant exporters of nitrogen fertilizers, due to the low cost of natural gas being captured at their oil extraction and processing fertilizers. Prior to establishing this industry, those countries simply flared their natural gas into the atmosphere as a waste product, which contributed to greenhouse gas emissions. Since natural gas as the main feedstock for this product accounts for between 70 and 90 percent of the cost of producing nitrogen fertilizer, these Middle Eastern countries have become strong competitors in the global market in recent decades and now account for about 35 percent of urea (a liquid form of nitrogen fertilizer) being traded globally.
Not only has the effective closure of the Strait of Hormuz shut down a significant share of nitrogen fertilizer trade for the past seven weeks, some of the manufacturing facilities making the fertilizer have been shut down or even damaged by Iranian missile or drone attacks. Even if the war ends in the next few weeks, it will take some time for production and delivery of nitrogen fertilizer from this region to resume normal trade flows.
While U.S. crop farmers are not as reliant on fertilizer imports from the Middle East as other parts of the world, such as Asia (including India), Brazil, and much of Africa, fertilizer products are priced at the global level and U.S. farmers are now facing prices that are as much as 50-70 percent higher than they were two months ago. While Agriculture Secretary Rollins asserted publicly a few weeks ago that 80 percent of U.S. crop farmers had pre-purchased their fertilizer products, the actual picture is far more nuanced. According to a survey conducted earlier this month by the American Farm Bureau Federation, they found that 70 percent of respondents indicated they could not now afford all the fertilizer they will need this year. The percentage of farmers who had pre-purchased their fertilizer varied considerably by region, at 67 percent in the Midwest but at less than half that rate in the Northeast and the West.
After shutting down most of the antitrust investigations into the agricultural sector that had been initiated during the Biden administration, Trump’s DOJ has recently shown renewed interest in this area, first within the meatpacking sector and more recently looking at potential concentration problems and antitrust activity within the fertilizer sector. In addition, in recent weeks, USDA officials have reportedly met with major fertilizer manufacturers, trying to convince them to hold down price increases in the United States. It is not clear how long it would take for any of these steps to generate meaningful price relief for fertilizer users.
About five years ago, the U.S. government imposed a nearly 20 percent countervailing duty on imports of phosphate fertilizers from Morocco, after determining that Moroccan exporters used unfair trading practices. Although the prices of phosphate and potash fertilizer products have not spiked as much in recent months as have nitrogen fertilizers, U.S. farm groups have seized upon the current 5-year sunset review to urge the government to withdraw that CVD on phosphate fertilizers to reduce input costs for farmers. However, the original initiators of that case, the Mosaic company and Simplot, favor keeping the CVD in place.
Farmers do have some options to reduce their fertilizer costs for this crop year. The easiest would be to simply apply a lower rate of fertilizer per acre, but the downside of this option would be the risk of lower yields. Other options would include adoption of split fertilizer applications, which prescribes applying fertilizer multiple times during the growing season to better match availability with plant demand, or expanded use of biological products such as nitrogen-fixing bacteria, which help fertilizer function more efficiently. Another option is to plan oilseed crops rather than grain crops, which require less use of nitrogen fertilizer. The Perspective Plantings report issued by USDA on March 31 projected that 4 million fewer acres of corn would be planted in the 2026/27 crop year than in last year, switching over to more planting of soybean acres. If fertilizer prices remain high as spring planting proceeds in the Midwest, more acres could shift from corn to soybeans over the next several weeks.
It appears that USDA will be announcing a plan sometime this week to use resources from tariffs collected on U.S. imports over the past year, up to tens of billions of dollars, in an apparent effort to ‘re-shore’ fertilizer production in the United States. Details of this plan are not yet available.
