Global Fertilizer Crisis: How the Iran War Threatens India's Food Security
Global Fertilizer Crisis: How the Iran War Threatens India's Food Security
The Iran war that began on February 28, 2026, is widely understood as an oil crisis. Brent crude at $120 per barrel, petrol prices soaring, LPG at Rs 913, these are the headlines that dominate the news. But there is a slower-moving crisis that could ultimately prove more devastating: the disruption of global fertilizer supply chains.
Fertilizers are the invisible foundation of modern agriculture. Without them, crop yields can drop by 40-60%, depending on the crop and soil conditions. India, which feeds 1.4 billion people on limited arable land, is heavily dependent on fertilizer imports. The Iran war has disrupted the supply chains that deliver these critical inputs, and the timing could not be worse: the Kharif (monsoon) sowing season begins in June 2026, just weeks away.
The Oil-Fertilizer Connection
Many people do not realize that fertilizer production is fundamentally an energy industry. The primary feedstock for nitrogen fertilizers, including urea, the most widely used fertilizer in India, is natural gas. The Haber-Bosch process, which converts atmospheric nitrogen into ammonia (the building block of urea), requires enormous quantities of natural gas both as a chemical feedstock and as an energy source.
Approximately 70-80% of the cost of producing urea is the cost of natural gas. When gas prices spike, urea prices follow. And natural gas prices, like oil prices, have surged in the wake of the Iran war. European natural gas benchmarks have increased by over 60% since late February.
Phosphate fertilizers (like DAP, di-ammonium phosphate) and potash fertilizers also face supply chain disruptions, though for different reasons. Phosphate rock, mined primarily in Morocco, China, and the Middle East, faces transportation disruptions as shipping routes through the Strait of Hormuz and the Red Sea become dangerous. Potash, produced primarily in Canada, Russia, and Belarus, was already constrained by sanctions on Russia and Belarus following the Ukraine war.
India's Fertilizer Import Dependence
India is one of the world's largest consumers of fertilizers, using approximately 60 million tonnes annually. The country's import profile reveals significant vulnerabilities:
Urea: India produces approximately 28-30 million tonnes of urea domestically but consumes about 35-36 million tonnes. The gap of 6-8 million tonnes is filled by imports, primarily from Oman, Saudi Arabia, Iran, and China. With Gulf-origin urea facing supply and transportation disruptions, this import pipeline is under severe strain.
DAP: India imports approximately 5-6 million tonnes of DAP annually, primarily from Saudi Arabia, Morocco, China, and Russia. The combination of higher input costs (phosphoric acid prices are linked to energy costs) and transportation disruptions is pushing DAP prices upward.
Potash (MOP): India imports virtually all of its potash requirements, approximately 4-5 million tonnes annually. Canada, Russia, Belarus, and Jordan are the primary sources. While potash supply is less directly affected by the Hormuz closure, elevated shipping costs and general market uncertainty have pushed prices higher.
The Price Impact
Fertilizer prices have already increased significantly since the Iran war began.
Urea: International urea prices have risen from approximately $280-300 per tonne before the crisis to $420-450 per tonne. India's domestically produced urea is sold to farmers at a heavily subsidized price of Rs 242 per 45 kg bag (approximately $5.40 per bag). The government absorbs the difference between the actual cost and the subsidized price, which has now widened dramatically.
DAP: DAP prices have risen from approximately $550-600 per tonne to $750-800 per tonne. In India, DAP is sold to farmers at a Maximum Retail Price (MRP) of approximately Rs 1,350 per 50 kg bag, with the government providing a per-bag subsidy. The subsidy burden has increased by approximately Rs 400-500 per bag.
Potash: MOP prices have increased from $300-320 per tonne to $380-420 per tonne. India's potash is entirely imported, and the full price increase is either passed to farmers or absorbed by the government.
The total fertilizer subsidy bill for the Indian government, already budgeted at approximately Rs 1.64 lakh crore for 2025-26, could increase by Rs 40,000-60,000 crore due to the war-induced price spike. This additional fiscal burden comes at a time when the government is already bleeding revenue from fuel excise duty cuts.
Timing: The Kharif 2026 Crisis
The Kharif sowing season, when farmers plant rice, maize, pulses, cotton, soybeans, and other monsoon crops, typically begins in June with the arrival of the southwest monsoon. Farmers begin purchasing fertilizers in April and May to prepare for planting.
If fertilizer supplies are disrupted or prices remain elevated during this critical window, the consequences could include:
Reduced Fertilizer Application: Some farmers, unable to afford or access fertilizers at current prices, may reduce application rates. Research shows that reducing urea application by 25% can reduce rice yields by 15-20%, and wheat yields by 10-15%.
Crop Substitution: Farmers may shift from fertilizer-intensive crops (like rice) to less intensive alternatives, altering cropping patterns in ways that could affect food availability later in the year.
Black Marketing: As with LPG, fertilizer shortages create conditions for hoarding and black marketing. Reports from several states already indicate that some distributors are holding back stock in anticipation of higher prices.
Food Inflation: Reduced crop yields from the Kharif season would translate into higher food prices during October-December 2026, when the harvest reaches markets. This delayed inflationary impact means that the Iran war's effect on Indian food prices could persist long after oil prices stabilize.
India's Domestic Fertilizer Industry
India has invested significantly in domestic urea production capacity. The government's New Urea Policy and the revival of closed fertilizer plants (including plants at Gorakhpur, Sindri, Barauni, Talcher, and Ramagundam) have added approximately 12 million tonnes of new urea capacity in recent years.
However, domestic urea production is itself dependent on imported natural gas. India imports approximately 50% of its natural gas requirements, and domestic gas production from fields like KG-D6 and Mumbai High cannot fully supply the fertilizer sector. Higher imported gas prices therefore increase the cost of domestic urea production, even if the physical supply chain for gas is less disrupted than for oil.
Indian fertilizer companies, including IFFCO, NFL, RCF, and KRIBHCO, are major producers but they too are facing margin pressure from higher input costs. Their ability to maintain production at full capacity depends on the government's willingness to increase subsidy payments to offset higher gas costs.
The Global Fertilizer Supply Chain Under Stress
India's fertilizer crisis does not exist in isolation. The global fertilizer supply chain was already under stress before the Iran war, having never fully recovered from the disruptions caused by the Russia-Ukraine conflict in 2022.
Russia is one of the world's largest exporters of all three major fertilizer nutrients (nitrogen, phosphate, and potash). Western sanctions on Russia, while technically exempting fertilizer exports, have created logistical and financial barriers that have reduced Russian fertilizer availability in global markets.
China, another major fertilizer producer, periodically restricts exports to ensure domestic supply, reducing availability for importers like India.
The Iran war has added another layer of disruption to this already fragile system. The result is a global fertilizer market that is tight, expensive, and vulnerable to further shocks.
What India Must Do
Addressing the fertilizer crisis requires both immediate and long-term actions.
Immediate: The government must ensure that fertilizer subsidies are increased adequately and disbursed on time so that farmers can afford to purchase inputs for the Kharif season. Any delay in subsidy payments to fertilizer companies could result in production curtailments at the worst possible time.
Short-term: India should diversify its fertilizer import sources, increasing purchases from non-Gulf origins. Diplomatic engagement with Morocco (phosphate), Canada (potash), and Central Asian countries (gas for urea production) should be intensified.
Medium-term: Accelerating the completion of Phase II domestic urea plants and expanding domestic phosphoric acid production capacity would reduce import dependence. Investment in alternative fertilizer technologies, including nano-urea (being developed by IFFCO), biofertilizers, and organic farming inputs, should be prioritized.
Long-term: India needs a fundamental rethinking of its fertilizer use patterns. The country's agriculture is heavily biased toward urea at the expense of balanced nutrition. Promoting soil health through balanced fertilization, organic matter incorporation, and precision agriculture technologies would reduce the intensity of fertilizer demand while maintaining productivity.
The Bottom Line
The Iran war is not just an energy crisis. It is a food security crisis in slow motion. The fertilizers that Indian agriculture depends on are becoming scarcer and more expensive, and the timing coincides with the critical Kharif sowing season.
India has the world's second-largest population and some of the world's smallest average farm sizes. Its farmers operate on razor-thin margins, and many cannot absorb significant input cost increases without reducing production. If the fertilizer supply chain is not secured in the next two to three months, the consequences could show up as food inflation and potential shortages later in 2026.
For a country where food security is both an economic necessity and a political imperative, the fertilizer dimension of the Iran crisis deserves far more attention than it is currently receiving.
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