The Gulf Fertiliser Crisis Is a Problem – and a Signal
How fertiliser dependence is reshaping risk across global agriculture
Insights
Contents
- The cost of dependence
- Regenerative farming reduces fertiliser use
- A call to action
- A moment for leadership
Share this article
A critical but often overlooked pillar of the global food system currently hinges on a narrow 34-kilometre maritime corridor in the Persian Gulf. The Strait of Hormuz moves roughly one-third of the world’s seaborne fertiliser trade, including Gulf-produced urea, phosphates, and sulphates, ingredients fundamental to synthetic fertiliser production.
These inputs depend on abundant, low-cost natural gas. With the route now largely blocked, shipments are stranded and oil and gas prices have surged by over 50%. At the same time, gas‑intensive synthetic fertiliser inputs have soared, with ammonia and urea prices increasing by 20-40% in key agricultural regions. Globally, farmers face a stark new reality: synthetic fertiliser can no longer be assumed to flow freely.
Even before the disruption, analysts warned that the fertiliser market was precariously balanced. Farmers are confronted with increasingly difficult decisions. As one put it: “Every year is a risk when you farm. But this has been compounding. Our prices have been low, and yet our input costs continue to ratchet up” (The New York Times).
The closure of the Strait did not merely expose fragility; it triggered a systemic shock long in the making. Combined with global geopolitical tensions and trade tariffs, the risk raises the real possibility of inflation, famine, and increased use of more carbon‑intensive fuels. The on-the-ground impacts are immediate and pervasive. US Midwest farmers report severe uncertainty: “This is the worst I’ve ever seen it. Gambling what our futures look like.” In one farmer’s experience, fertiliser prices rose by USD 13,000 in just two days. She added: “What pot does that come out of? Fertiliser price we can’t control. Fuel price we can’t control” (The New York Times).
This comes at the worst possible moment for farmers in the Northern Hemisphere: planting season.
The cost of dependence
Synthetic fertiliser has transformed global agriculture. It is often said that roughly half the world’s population owes its survival to it. With the introduction of synthetic fertiliser, yields increased by 30–50%, significantly boosting land productivity. Mass production expanded global access to an effective and affordable solution that has been widely adopted, and in some regions subsidised.
In recent years, however, farmers have endured persistent and severe input price volatility, including a 50% increase in global fertiliser prices between 2021 and 2022, driven by energy prices and geopolitical events. After urea prices spiked by more than 40% in 2022, the closure of the Strait caused prices to rise by another 28% in just three weeks.
Farmers once again face unenviable choices:
- Access the right types and volumes of fertiliser amid soaring prices
- Reduce application rates and risk lower yields
- Switch to lower-input crops with potentially reduced profitability
- Sell existing fertiliser stocks instead of planting at all
At the same time, global evidence shows that fertiliser is routinely over-applied, often with little additional agronomic benefit. Approximately two‑thirds of nitrogen and over half of phosphorus applied globally is not taken up by crops. Excess nitrogen and phosphorus can leach into waterways, degrading ecosystems and directly undermining farm profitability.
For all these reasons, continued dependence on synthetic fertiliser at current levels is unsustainable environmentally, financially, and strategically.
Regenerative farming can support reduced fertiliser use without sacrificing performance
We are facing a global crisis, but early-adopting farms with established regenerative practices are already mitigating risk and strengthening resilience.
Regenerative agriculture prioritises practices that increase soil organic matter, improve water retention, and enhance nutrient cycling. This reduces reliance on synthetic inputs and ensures any fertiliser used is far more efficient – and it works.
In a first‑of‑its‑kind EU‑wide, multi-crop study, farmers adopting regenerative approaches achieved on average:
- 61% less synthetic nitrogen
- 75% fewer pesticides
- 20% higher gross margins
- Only a 2% average reduction in yield
Further research in the United States shows that regenerative agriculture can reduce fertiliser and pesticide use by up to 50% and 75% respectively for crops such as wheat. These reductions translated into average cost savings of USD 24 per acre for maize and USD 17 per acre for soybeans. Over the longer term, regenerative systems can deliver a 70–120% increase in profitability and a 15–20% return on investment following the transition period.
Transitions from conventional systems demonstrate that substantial reductions in nitrogen, phosphorus, and potassium (NPK) inputs are achievable while maintaining competitive yields. Similar outcomes have been observed in maize systems in China, where yields remained stable across varying NPK levels while nutrient losses and nitrous oxide emissions fell sharply.
Research across arable, mixed-crop, and agroforestry systems reinforces this trend. Practices such as cover cropping can maintain comparable, or only marginally lower, yields while dramatically reducing synthetic input requirements.
Crucially, regenerative practices also build climate resilience. Soils rich in organic matter store more water, buffer against extreme rainfall, and retain moisture during drought, a critical advantage in an increasingly volatile climate.
A call to action for agribusiness
The current supply shock is a clear risk signal.
Companies best positioned for the decade ahead will be those that embed low‑fertiliser, regenerative sourcing models at the core of their supply chains, rather than relying on just‑in‑time systems that remain highly vulnerable to disruption.
Practical steps companies can take include:
- Assess risk exposure within sourcing strategies and supply chains
- Quantify physical and transition risks across key commodities
- Build executive‑level and farm‑level business cases for action
- Set evidence‑based targets for climate, nature, and farmer livelihood outcomes
- Develop practical implementation roadmaps with measurable adoption metrics
- Collaborate across the value chain to unlock innovative financing solutions
- Engage stakeholders through education, workshops, and training
- Monitor, report, and verify on‑the‑ground outcomes
A moment for leadership
This crisis is a catalyst, an invitation to redesign rather than merely react. By embedding regenerative agriculture as a core business strategy, agrifood companies can convert volatility into long‑term advantage, strengthening relationships between brands, farmers, and the soil that ultimately sustains us all.
Explore our Agribusiness Solutions
If your organisation would like support in accelerating the transition to regenerative supply chains, Anthesis can guide you.
We are the world’s leading purpose driven, digitally enabled, science-based activator. And always welcome inquiries and partnerships to drive positive change together.
