Fertilizer time bomb threatens to drive up Europe’s food prices

 

Fertilizer time bomb threatens to drive up Europe’s food prices

 

Fertilizer and fuel prices are surging. Europe’s political response has been muted. Consumers’ real pain is set to arrive with next year’s harvest.

 

May 7, 2026 6:26 pm CET

By Bartosz Brzeziński and Ketrin Jochecová

https://www.politico.eu/article/europe-farmer-fertilizer-prices-iran-war-inflation/

 

More than two months into the unfolding war in Iran, the conflict has yet to reach most shoppers at the checkout. Supermarket giant Carrefour insists its prices haven't moved and German discount chain Aldi says the same.

 

It's not going to last.

 

The war in the Gulf connects to higher prices on a baguette via three slow steps. Gas becomes fertilizer. Fertilizer feeds crops. Crops become food. Each takes weeks; the full cycle lasts months.

 

"Most of the food currently on supermarket shelves was produced using inputs that were purchased or contracted before the crisis fully unfolded," said David Laborde, who runs the Agrifood Economics Division at the U.N's Food and Agriculture Organization. "The current stability mainly reflects timing, not immunity."

 

Europe produces its own nitrogen fertilizer, but makes it from imported gas. When Gulf disruption pushes gas prices up, European-made fertilizer gets more expensive too.

 

Since Iran's retaliation against U.S.-Israeli strikes closed the Strait of Hormuz, a critical maritime waterway, gas prices are up 59 percent and some fertilizers as much as 50 percent. In Germany, urea, the most widely traded fertilizer, now sells for around €550 per metric ton, rising from roughly €370 before the war.

 

Shoppers will feel fuel costs first, by late summer. The fertilizer hit lands later.

 

Spring is paid for. Fall isn't.

For spring, Europe's farmers got lucky. Most had stocked up on fertilizer before the war, and European Commission officials say this season's needs are "largely secured."

 

That luck is running out. Farmers are now placing orders for this fall's plantings, and the math doesn’t work out. Wheat is selling for the same price it sold for before the war, even as fertilizer costs have risen. Some growers are cutting back on nitrogen. Others are switching to crops that need less of it. Both choices mean smaller harvests in 2027, when shoppers will finally feel the effects of the war.

 

Some countries didn’t even get the spring cushion. Ireland has almost no domestic fertilizer industry, and 90 percent of its farmland is grassland that needs nitrogen all season long.

 

Most Irish farmers, said Noel Banville of the Irish Farmers’ Association, only start buying in February and continue through September. They didn’t pre-buy. They’re signing orders at war prices now.

 

In Sweden, a mid-range agriculture player in the EU, the national farm federation calculates the war has already cost its members €160 million, or 12 percent of profits. “For those farmers that have fertilizer in stock they can go ahead as planned,” said Ingrid Rydberg of the federation, LRF.

 

Those who don't, she said, will use less fertilizer, harvest less and pass the cost on to consumers.

 

Brussels takes note

In response to the disruption, the Commission has acted to ease the energy crunch and loosen state aid rules to help farmers.

 

Fertilizer is harder. Europe's dependence on imported gas for its own nitrogen production has been building for decades. The fertilizer action plan that Agriculture Commissioner Christophe Hansen will unveil on May 19 was being drafted long before the war.

 

 

The plan rests on four pillars: cut import dependency, boost domestic production, push low-carbon alternatives and help farmers use less.

 

None of those pillars works on the timeline of a 2027 planting decision. Building a fertilizer plant takes three to four years, and EU production is already running 19 percent below 2019 levels.

 

Then there is the tax. The EU’s carbon border tax on imported fertilizer, known as CBAM, took effect on Jan. 1 and imposes a surcharge on imports from countries with weaker climate rules.

 

Landing on top of a war-driven price spike, it is making fertilizer harder to afford just when farmers need it most. Italy and France want it suspended while Poland and Germany, home to the bloc's biggest nitrogen plants, want it kept. The Commission appears conflicted: earlier drafts of the May 19 plan included CBAM relief while the latest version drops it, according to two people familiar with the file.

 

“When the crisis in the Middle East stops, the CBAM cost will remain,” said Jean-Baptiste Boucher, communications director at Copa-Cogeca, the EU’s main farmers lobby.

 

Where the cushion runs out

In Washington, President Donald Trump, whose airstrikes set off the Iranian retaliation that closed the Strait of Hormuz, has been posting in all caps about fertilizer monopolies and dispatching the Navy.

 

American farmers, who buy fertilizer closer to planting and have less time to stockpile, are already feeling the pain Europe expects next year. Roughly 70 percent say they cannot afford all the fertilizer they need this year, according to the American Farm Bureau Federation. The U.S. Department of Agriculture is forecasting the smallest wheat crop since 1919.

 

Globally, the exposure is starker. Brazil faces a phosphate shortage of up to three million metric tons before its September soybean planting. Ethiopia, which routes 90 percent of its nitrogen fertilizer through Djibouti from the Gulf, has no alternative. Forecasters now put the odds of a strong El Niño above 90 percent, bringing extreme weather to the same regions already worst hit.

 

The U.N.'s World Food Program has warned that 45 million more people could be pushed into acute food insecurity if the war continues past mid-year.

 

“This is not like the Ukraine shock,” said Alvaro Lario, president of the International Fund for Agricultural Development, a U.N. agency founded after a similar fertilizer and oil crisis nearly 50 years ago. “That was immediate. This one is slower, but we know it’s coming.”

 

China has made it worse. Beijing suspended phosphate fertilizer exports through August, restricted nitrogen-potassium blends in March and announced a halt on sulfuric acid exports starting in May.

 

Export restrictions, Lario said, are the biggest risk left in the system — the move that turns a price shock into a shortage. But his larger point is that these crises keep coming, every eight to 10 years for the last half-century, and the structural fixes promised after each one rarely get built.

 

The Commission's fertilizer plan, when it lands on May 19, will be Europe's answer to that argument, or its evasion of it. The first CBAM certificates come due on Feb. 1, 2027. The next harvest will be planted before then.

 

By that point, the prices at Carrefour and Aldi will probably have changed.