The spark of Iran-Israel war smoldering in the Middle East is now posing such a threat to the world, the flame of which is going to reach straight to your kitchen. Till now, only the rising prices of crude oil and gas are being discussed everywhere, but according to economists, this is only half the picture. The breakdown of the supply chain of fertilizers is more dangerous than stopping the movement of oil through the Strait of Hormuz. This is a crisis that will slow global food production and take inflation to new levels in the coming months. India, which is largely dependent on imports for its agricultural needs, is not going to remain untouched by this storm.
World’s food security is linked to Gulf countries
When we hear the name Middle East, only oil wells come to mind, but Saudi Arabia, Qatar, Oman and UAE are the largest global suppliers of urea, sulfur and ammonia. Iran alone is the world’s third largest ammonia producer. This chemical is the lifeblood of fertilizers that nourish crops. If this war prolongs, the production of fertilizer from these countries and its transportation through ships will collapse badly. Stopping the supply just before the new farming season means that farmers will not have enough fertilizer, which will directly affect the grain yield.
Hope is also being lost from Russia and China
The effect of this tension is beginning to be visible in the global markets. Shipping routes have become unstable and production at many plants has decreased. Ammonia prices in Europe have reached $725 per tonne and urea prices are on fire in the Middle East too. In such a situation, it is expected that Russia, the world’s largest fertilizer exporter, will fulfill this shortage, but its production capacity has its own limits. At the same time, China has banned the export of phosphate and sulfur production in Qatar has fallen. Due to all these reasons, a huge shortage of fertilizer has arisen in the international market.
Indian farmers will be affected
Every month, India imports about 20 lakh tonnes of fertilizer from abroad for its requirement. If we look at the figures, we are 100 percent dependent on imports for Muriate of Potash (MOP) and 60 percent for DAP. In the last financial year (2024-25) alone, the Government of India had spent approximately Rs 1.9 lakh crore on fertilizer subsidy. Experts estimate that due to supply disruption from the Middle East, urea prices may rise by 30 to 40 percent.
Its simple mathematics is that either the subsidy burden of the government will increase exponentially, or the cost of farming of the farmers will increase. If farmers use less fertilizer or choose low-yielding crops due to expensive fertilizers, grain production will fall. If less grains reach the markets then the prices of food items will start touching the sky.