The Fertilizer Shock Could be Far Worse than the Oil Shock

Half the world’s food exists because of industrial nitrogen, phosphate and potash. A disruption to those supply chains is not just inflationary — it threatens physical food production itself.

I wrote The Mineral Imperative because I felt there was a fundamental blindness in society when it came to understanding how essential both mining and minerals were to the lives of everybody on this planet. To explain that modern civilisation rests not on abstractions, but on physical systems: energy, minerals, chemicals and industrial supply chains. Every calorie we eat, every home, every device we use and every modern convenience we depend upon ultimately begins as extracted material transformed through industrial processes.

Contrary to popular belief, it is often not the glamorous “future-facing” minerals that matter most in moments of crisis, but the vast invisible flows of seemingly mundane materials — fertilizer, sulfur, ammonia, phosphate and potash — that quietly sustain billions of lives. These are the industrial lifelines of modern civilisation. And when they fail, the consequences are not theoretical.

While the war in the Gulf appears to be easing, the world has just been reminded of something far more important than oil prices: the Gulf is also one of the most critical fertilizer chokepoints on Earth.

And right now, the fertilizer shock may be more dangerous than the energy shock.

Everyone is talking about “10–20% food inflation” as though this is another temporary supply-chain problem. But that framing may profoundly underestimate what is happening. This is not just about more expensive food. It is about the possibility of physically producing less food.

Modern agriculture is not a natural system in the way most people imagine. It is an industrial system built on fertilizer. 50% of the crops on the planet are only grow because we add Nitrogen, phosphorus and potassium — N, P and K — the planet could not feed anything close to 8 billion people without them.

That system is now under simultaneous pressure from ammonia shortages, sulfur shortages, disrupted Gulf exports and soaring fertilizer prices. Ammonia is the foundation of nitrogen fertilizers that drive crop growth. Sulfur, while not generally understood as a fertilizer nutrient, is essential for converting phosphate rock into the soluble phosphate fertilizers.

The problem is not simply that fertilizer has become more expensive. It is that there may not be enough of it, in the right place, at the right time, for key planting windows this season. Even if Gulf production normalizes quickly, fertilizer supply chains operate with long lead times, and disruptions during planting season cannot simply be “made up” later. If fertilizer is unavailable or unaffordable when crops need it, application rates fall and yields fall with them.

The world has never experienced a fertilizer shock of this scale in the modern industrial agricultural era. Existing models are largely built around minor affordability shocks, not significant physical shortages. A logical reading of the numbers suggests the risk may be far more severe than current consensus forecasts imply.

And that matters because food systems do not fail evenly. Wealthier countries may still be able to outbid poorer ones for remaining fertilizer supply. Poorer agricultural systems may apply less or no fertilizer and produce materially less food.

That is how a fertilizer crisis becomes a food security crisis.

What N, P and K Actually Do

Modern agriculture rests on three foundational nutrients: nitrogen (N), phosphorus (P) and potassium (K). Together, they underpin the productivity of the modern food system. Remove any one of them and yields fall, often dramatically. Importantly, they are not interchangeable. More of one cannot compensate for a shortage of another.

This is because crops are governed by what agronomists call “co-limiting nutrients. Extra nitrogen cannot compensate for phosphorus-starved roots or potassium-deficient crops vulnerable to drought and disease.

Nitrogen is the growth engine of modern agriculture. It drives leafy vegetative growth and is a core component of amino acids, proteins and chlorophyll, making it fundamental to photosynthesis and biomass production. In simple terms, nitrogen largely determines how fast and how large crops grow. When nitrogen is deficient, plants become pale, stunted and low yielding.

Modern agriculture depends overwhelmingly on synthetic nitrogen produced through the Haber–Bosch process, one of the most consequential industrial breakthroughs in human history. This process combines nitrogen from the air with hydrogen, 90% of which is derived from natural gas, under high temperatures and pressures to produce ammonia. Ammonia is then converted into fertilizers such as urea and ammonium nitrate.

Phosphorus plays a very different role. It is critical for energy transfer within plants through ATP, supports photosynthesis and respiration, and is essential for root development, flowering and grain formation. A phosphorus-deficient crop may survive, but it develops weak roots, matures poorly and struggles to produce seeds and grain efficiently.

Phosphorus begins as mined phosphate rock, but raw phosphate is largely unusable by plants in its natural form. To make it agriculturally useful, it must be processed into soluble phosphate fertilizers using sulfuric acid. What is not well understood is that during the process elemental sulfur bonds with the phosphorus becoming an essential part of the nutrient. This is why sulfur matters so profoundly to global food systems. Roughly 60% of global sulfuric acid production is used to process phosphate fertilizers. Without sulfuric acid, vast quantities of phosphate rock remain geologically abundant but agriculturally inaccessible.

Potassium, sourced almost entirely from mined potash deposits, governs resilience. It regulates water movement within plants, controls stomatal opening, activates enzymes and strengthens disease resistance. Potassium is less about rapid growth and more about crop quality, structural integrity and stress tolerance. Deficient crops develop weak stalks, scorched leaves and heightened vulnerability to drought, pests and disease.

The scale of global dependence on these nutrients is staggering. Synthetic fertilizers are estimated to have roughly doubled global crop yields over the past century and are widely believed to support food production for around half of the world’s population. Modern agriculture now consumes hundreds of millions of tonnes of fertilizer nutrients annually.

Timing also matters. Fertilizer is not something farmers can simply apply whenever supplies arrive. Crops require nutrients during narrow agronomic windows tied to planting and critical growth stages. If fertilizer shortages, logistical disruptions or price spikes prevent nutrients from being applied at the right time, the yield potential for that season is permanently lost, even if supplies recover later.

This dependence is also deeply unequal. Much of the developing world still cannot afford sufficient fertilizer application. Across parts of sub-Saharan Africa, fertilizer use per hectare remains a fraction of levels seen in Europe, China or North America, contributing to chronic food insecurity. Improving fertilizer access is a major priority for global development institutions and UN agencies, because in many regions the difference between nutrient-deficient soils and properly fertilized crops is not marginal productivity, but the difference between subsistence and surplus.

Hormuz: The Fertilizer Chokepoint the World is failing to properly understand

The Strait of Hormuz is usually discussed as an oil chokepoint. In reality, it is also one of the most important arteries for global fertilizer.

The Persian Gulf region dominates a substantial share of global nitrogen fertilizer exports, particularly urea, with roughly 40–45% of globally traded urea volumes originating from producers in the Gulf.

The vulnerability extends beyond nitrogen. Around 40–50% of global seaborne sulfur trade also moves through the Strait of Hormuz, because it is a by-product of the “sour” oil and gas the Gulf. Sulfur is what we make sulfuric acid out of, which is arguably the worlds most important industrial chemical. Roughly 60% of global sulfuric acid production is used to convert phosphate rock into soluble phosphate fertilizers that plants can actually absorb. Without sulfur, large parts of the phosphate fertilizer chain begin to seize up.

Modern fertilizers are deeply interconnected industrial products. Monoammonium phosphate (MAP) and diammonium phosphate (DAP), two of the most widely used fertilizers products in global agriculture, require both ammonia and sulfur during production. In effect, the nitrogen and phosphate systems are linked through the same vulnerable trade corridor.

The consequences are already rippling through markets. Fertilizer analysts have warned that any prolonged disruption in Hormuz would hit the global nitrogen complex first, particularly ammonia and urea, before cascading into phosphate markets. In recent months sulfur prices have surged sharply, in some regions reportedly tripling, while phosphate fertilizer producers have already begun cutting production. Major producer The Mosaic Company has reportedly reduced phosphate fertilizer output by around 50% at some facilities due to sulfur shortages and soaring input costs.

Ammonia and urea prices are up ~30–40%. MAP and DAP prices have surged ~25–50%. And these are not just paper moves in commodity markets. If fertilizer is either unavailable or too expensive, farmers apply less of it, and yields ie food production falls. Its that simple. There is no financial engineering solution to that reality.

This is the critical distinction many policymakers still miss. The risk is not merely “food inflation” in the abstract. The real risk is that parts of the world physically produce significantly less food.

The yield effect depends on where the farmer sits. In highly fertilized systems, some producers can trim nitrogen without immediate catastrophic losses, especially where soils are nutrient-rich or manure is available. A recent EU modelling study found that a 25% reduction in mineral nitrogen could cut yields by up to 11.2% at EU level, with soft wheat hit hardest, while some maize systems saw little immediate effect because they already had high nitrogen surpluses.

But in lower-income, input-constrained systems, the damage is much sharper. Evidence from Ethiopia found that a 20–50% fertilizer price rise can plausibly translate into application cuts of up to 50% and leads to much more material fall in yields.

What is being modelled is that in protected, subsidised or high-income systems, application rates may fall only modestly, perhaps 5–15%, but margins will be crushed. In poorer import-dependent regions, or where credit is tight and subsidies are insufficient, reductions of 15–30%. Forecast yield losses range from low single digits in buffered systems to 10–20%+ in nutrient-constrained systems, especially for wheat, maize and rice if nitrogen or phosphate is missed at the critical growth window.

But I question whether these models are capturing the reality of what is happening. If roughly half of key ammonia and sulfur inputs required for global fertilizer production are disrupted, this is no longer a normal pricing shock leading to modest “thrifting” in fertilizer application because of higher prices. It begins to look much more like systemic supply-chain failure.

Conservatively, the world may now be facing a situation where 25–50% less fertilizer is physically available but also crucially what is available might not get where it needs to go at any price. Fertilizer supply chains are not frictionless. Product still has to be processed, shipped, financed, insured, distributed inland and delivered to farms within narrow planting windows. With the key input stage broken there is not telling how the supply chain will function.

That distinction matters enormously. Most existing models implicitly assume fertilizer remains broadly available and that markets simply ration supply through higher prices. But in a true physical shortage, farmers are not applying “what they can afford.” They are applying whatever they can actually get hold of.

The consequences of that are profoundly unequal. Many poorer import-dependent agricultural systems may simply be priced out entirely or unable to secure physical supply at any price. In practice, that means the poorest farmers apply little or no fertilizer, middle-income systems apply far below optimal rates, and even wealthy agricultural producers begin rationing nutrients to preserve cash flow and stretch limited supply.

Nobody has really modelled a modern agricultural system operating under those conditions because the world has never experienced a fertilizer disruption of this scale in the industrial era. Most forecasts are still extrapolating from previous commodity price spikes where supply chains continued functioning. This time, the risk is not just higher prices. It is that significant volumes of fertilizer may simply not be available where and when the world’s crops need them.

The moderate case may be too neat because it assumes the fertilizer system still clears through price. A worse case is plausible precisely because availability breaks before affordability does.

A 5–10% global cereal reduction may be the consensus-style number, but it is not the true tail risk. This is not a normal fertilizer price spike. It is a physical production and trade shock hitting nitrogen, phosphate, ammonia, sulfur and sulfuric acid at the same time.

Mosaic is one of the largest strongest fertilizer giants in the world, to reduce 50% of phosphate production guidance in some places is therefore not a marginal market signal. It is evidence that even major producers cannot simply “pay up” and keep producing normally when a critical reagent is unavailable.

The realistic severe case is therefore not a neat 5-10% global yield loss. In import-dependent, credit-constrained regions, fertilizer application could plausibly fall by 20–40% or more. Australia is already being discussed in those terms, with reports warning that a 45% cut in fertilizer use could reduce wheat production by up to 25%, and barley and canola by more than 30%.

At global level, the first-order hit may still look smaller because Europe, North America and China will outbid poorer buyers. But that does not make the crisis mild. It means the shock is redistributed onto the countries least able to absorb it. The tail risk is a two-speed food system yields fall hardest where food insecurity is already most acute.

Even if the Strait of Hormuz opens today, it will be 3-6 months minimum before key fertilizer inputs make it to market, way too late for this year’s planting window. Then there is the next problem.

El Niño is a naturally recurring climate cycle in which unusually warm water spreads across the central and eastern Pacific Ocean, disrupting weather patterns around the world. It typically occurs every 2–7 years and can last from several months to more than a year.

In agriculture, El Niño matters because it often brings drought to some of the world’s major food-producing regions while causing floods in others. Historically, strong El Niño events have reduced yields of crops such as wheat, rice, maize, palm oil and sugar by disrupting rainfall, increasing heat stress and shortening growing seasons, which can tighten global food supplies and push prices sharply higher.

Current forecasts suggest there is roughly an 80–90% chance that El Niño develops during 2026, according to NOAA’s Climate Prediction Center and the World Meteorological Organization. NOAA’s latest outlook puts the probability at about 82% between May and July 2026, with around a 96% chance it persists into winter.

Some forecasters are also warning that this could become a particularly strong event. Several models now suggest roughly a 50% chance of a “super El Niño”, meaning an unusually intense warming event comparable to 1997–98 or 2015–16.

That would not produce ordinary food inflation. It would produce a physical food shock.

A very uncomfortable conclusion

The real danger here is not simply that food becomes more expensive. It is that the industrial system that underpins modern agriculture begins to fail at the margins all at once.

Modern civilization depends on a constant flow of nitrogen, phosphate and potash and sulfur moving through a tightly synchronized global supply chain. That chain is now under simultaneous pressure from disrupted ammonia exports, sulfur shortages, collapsing phosphate output, surging fertilizer prices and the growing risk of major weather disruption from El Niño. Policymakers and markets are still largely treating this as another inflation story. But inflation assumes the product is still there to buy.

That assumption may no longer hold.

The world has never experienced a disruption of this scale to the physical availability of ammonia, sulfur, sulfuric acid and phosphate simultaneously during the modern industrial agricultural era. Most existing models are therefore built on historical relationships that may no longer apply. They assume farmers “thrift” fertilizer use around the edges while the system broadly continues functioning. But if large volumes of fertilizer simply do not arrive in time for planting windows, then this stops being a pricing problem and becomes a production problem.

And global food systems are far more fragile than most people realize. Grain markets are thin relative to total consumption. A modest reduction in exportable surplus can create violent price moves globally. Wealthier countries may still secure supply through subsidies and purchasing power. Poorer nations will not. That means the burden of this shock is likely to fall hardest on the countries already most vulnerable to hunger, political instability and food insecurity.

The truly uncomfortable possibility is that current forecasts are dramatically underestimating the scale of the risk because they are still modelling higher prices, not outright shortages. A rational reading of the fertilizer numbers suggests the potential for materially lower crop production across large parts of the world, particularly in import-dependent agricultural systems where fertilizer access is already constrained.

If that happens alongside a major El Niño event disrupting rainfall and harvests globally, the outcome is not “10–20% food inflation.” It is a genuine physical food shock.

And physical food shocks do not just raise prices. They change politics, destabilize governments and, in the poorest parts of the world, leave people hungry.