Industry News

While the Iran war's impact on oil prices has captured much of the attention of global markets, the impacts to the world's food supply chains can't be overstated.

"It hits every layer of the supply chain," says Tammy Kulesa, senior director of product marketing for supply chain management company Blue Yonder.

To understand the real scale of the issue, it all starts with the building block of crop production: fertilizer. Roughly a third of global seaborne fertilizer passes through the Strait of Hormuz, as well as 35% of nitrogen-based fertilizers (known more commonly as urea), and 45% of global exports of sulphur, an ingredient used in phosphate fertilizer. 

With traffic through the strait largely at a standstill, the timing couldn't be worse for farmers, who are entering into the spring planting season, and now must decide how much fertilizer they can afford to use, and whether they'll have to plan for lower yields in the face of higher prices and shorter supplies. In the U.S. alone, roughly 50% of nitrogen that is used to grow corn, 28% for cotton, and 42% for wheat is applied during the spring, according to the American Farm Bureau, And any disruption to fertilizer supply chains during the early part of that season could have lasting effects on crop yields and operating schedules as farmers enter into some of their most important months of the year.

Global fertilizer prices were also on the rise even before the Iran conflict began. Prices were up by 18% in 2025, according to data from World Bank, and by March 11, 2026, they had jumped by another 26%, rising from $465.5 per metric ton to $585. The impacts from those price pressures have been immediate too. In a March 9 market intel report, the American Farm Bureau cited feedback from farmers who said that they were already considering reducing the acreage of corn they would plant, in exchange for crops like soybeans, which are less vulnerable to fertilizer price volatility.

"At the same time, many farmers are already facing significant cost pressures as production expenses remain elevated, reducing working capital that would normally help absorb unexpected shocks," the AFB said.

From there, it's not rocket science; higher costs tend to get passed down the line, all the way to the consumer, with impacts often felt months after the fact once those yields make their way onto grocery store shelves. It's not just fresh fruits and vegetables that could increase in price either, given that crop yields factor into a range of different food categories, Kulesa points out. That includes grains that go into bread products, corn that's processed into syrup found in a range of shelf-stable foods, and even dairy products, which rely on output from cows, goats and sheep that consume grain-based animal feed. 

As for rising energy prices, the effects are felt far beyond the gas pump. Roughly a fifth of the world's liquefied natural gas passes through the Strait of Hormuz, and natural gas is an essential ingredient for producing urea. Additionally, higher fuel costs threaten to drive up expenses across transportation, processing and refrigeration, adding even more pressure to already strained food supply chains, and amplifying the risk of higher prices for consumers in the months ahead.

"The supply chain is such an interconnected web, and any pressure on one part has vertical effects across the entire system," Kulesa explains. Expensive fuel, restricted movement of inputs like fertilizer, longer delivery times from rerouting; all of these things represent substantial problems on their own, she adds, but together, they create a larger web of challenges that becomes more difficult to unravel the longer the conflict drags on.

The fallout is even being felt by restaurants, particularly in India, which relies on the Strait of Hormuz for 90% of its liquefied petroleum gas imports for cooking fuel. The Times of India reports that as of March 11, nearly 20% of hotels and restaurants in the country's capital of Mumbai were either fully or partially shut down due to a shortage of the gas, with local industry bodies warning that 50-60% establishments could close within days if the crisis continues.

Elsewhere, Bangladesh has shut four of its five fertilizer factories, India has slashed output from three of its urea plants, back in the U.S. the shortfall in fertilizer is estimate at nearly 25% short for this time of year, Al Jazeera reports. Brazil — which produces nearly 60% of the world's soy bean exports — also imports nearly half of its fertilizer supply through the Strait of Hormuz, meaning that any prolonged closure of the waterway could soon ripple through global soy markets and animal feed supplies.

Every day the conflict continues threatens to widen the global impacts to food supply chains, affecting everything from crop yields to grocery store prices. 

"The energy costs, shipping, the raw materials, all of these things work together, and it eventually does hit the consumer," Kulesa says. "We're at a point of watching and waiting to see how this will impact us, but we can certainly expect that those increases in logistics and transportation costs are going to result in more inflationary pressure overall."

To read it in supplychainbrain.com: click here