Máximo Torero
The recent memorandum of understanding between the United States and Iran promises to restore the flow of oil, natural gas, sulfur, and fertilizers through the Strait of Hormuz, easing pressure on agricultural markets and reducing the risk of a deeper global food security crisis. Yet while the MOU may reduce the intensity of the shock (assuming the Strait remains open), it cannot erase the central lesson of the past four months: agriculture remains dangerously vulnerable to disruptions in fertilizer supply chains. Given deep uncertainty over the MOU itself, not to mention long-term relations with Iran more broadly, countries should use whatever easing of immediate pressures occurs to strengthen resilience before the next shock arrives. The question is not whether another disruption will occur, but whether we will be better prepared when it does.
Over the past five years, agriculture has absorbed a succession of crises, from the COVID-19 pandemic to wars and repeated climate-related disasters. Each exposed weaknesses in supply chains, energy systems, and agricultural production. Few, however, offered such a clear opportunity to address those vulnerabilities before the next crisis emerged.
Perhaps the most unsettling lesson from the closure of the Strait of Hormuz is the gap between what we knew and how we prepared. The risks associated with fertilizer disruptions were well understood, yet the global agriculture sector entered the crisis with limited safeguards and no coordinated international reserve mechanism for critical inputs. As a result, a single waterway carrying roughly 20–30% of globally traded fertilizers and about 50% of global sulfur exports has become a point of failure for producers across multiple continents. When flows were interrupted, there was no meaningful buffer to stabilize markets and no alternative source capable of replacing lost supply at scale.
In Latin America, one of the world’s largest agricultural exporting regions, production depends heavily on imported fertilizers. In many African countries, where fertilizer use is already low, even modest disruptions can lead to significant productivity losses. The crisis highlighted how concentrated and fragile critical-input supply chains have become. Building resilience requires more than restoring trade. Strategic reserves, stronger storage capacity, diversified trade corridors, and more robust logistics networks can mitigate exposure to chokepoints and provide governments with greater flexibility during periods of disruption.
International financial institutions and development banks should support these investments, particularly in countries already facing debt constraints and balance-of-payments pressures. The shock also highlighted the close relationship between energy and agrifood systems. In many developing countries, millions of irrigation pumps, transport networks, and farm machines still rely on diesel, so that volatility in fuel markets translates rapidly into higher production costs. Reducing agriculture’s exposure to energy shocks through investments in rural electrification and renewable energy can improve both resilience and long-term competitiveness. Yet resilience ultimately depends not only on securing fertilizer supplies but also on using them more effectively. The most resilient farming systems are not necessarily those that apply the most fertilizer, but those that apply the right nutrients, in the right place, at the right time. One clear lesson of the crisis is that falling fertilizer prices are not always good news.
The recent decline in urea prices partly reflected weaker demand as farmers delayed purchases or reduced application rates because of uncertainty, liquidity constraints, supply concerns, and lower expected profitability. Such demand destruction may ease prices in the short term, but it often signals lower nutrient use, which can translate into reduced yields and tighter food supplies later. The future of fertilizer security may therefore depend less on applying more nutrients than on understanding the soils beneath our feet. Investments in soil mapping, precision nutrient management, and improved agronomic practices can help farmers match fertilizer applications to the actual needs of crops and soils, raising productivity while reducing waste and dependence on volatile international markets. Information should be treated as critical agricultural infrastructure.
Governments and the private sector should work together to develop common standards and shared platforms that transform soil data into a global public good. Crises often create a temptation to search for a single solution. Agriculture rarely offers one. Green ammonia and related technologies could eventually diversify fertilizer production and reduce dependence on fossil fuels, although costs remain significantly above those of conventional ammonia, and large-scale deployment is still years away. At the same time, innovation funds and research investments should support alternative fertilizers, bio-stimulants, beneficial microorganisms, improved crop genetics, and technologies that enhance nutrient efficiency and soil health. Effective fertilizer strategies must remain science-based, adapted to local conditions, and combine synthetic fertilizers with improved soil management and biological solutions. Ultimately, resilience is about preserving options when conditions change unexpectedly.
Early warning systems, market monitoring, agricultural insurance, and anticipatory action protocols allow governments to respond to disruptions before they become crises. These investments matter whether the next shock originates in geopolitics, climate variability, or energy markets. Regardless of the outcome of the MOU between the US and Iran, the economic consequences of the disruption in the Strait of Hormuz will continue to move through agricultural systems long after shipping routes return to normal. The UN Food and Agriculture Organization’s analysis suggests that as higher input costs and production adjustments work their way through markets, producers may continue to face lower profitability and income losses in 2026.
Governments, international financial institutions, and development banks should seize this moment to strengthen critical infrastructure, improve access to agricultural information, diversify supply chains, and build more resilient fertilizer systems. The vulnerabilities exposed by this crisis were well understood before it began. They should not remain unresolved after it ends.
The writer is Chief Economist of the Food and Agriculture Organization of the United Nations.
