While potash exports do not pass through vulnerable areas on their way to markets in North America, South America and Asia, the crisis will impact sales because potash is a discretionary crop input.The Globe and Mail
The war with Iran is pushing the price of critical fertilizers higher, just as farmers across North America begin the spring planting season and are in need of crop nutrients.
A significant amount of all fertilizer trade passes through the 39-kilometre-wide Strait of Hormuz, which essentially shut down this week after Iran said it would “set fire” to any ships that try to pass through.
Growers have been beleaguered over the past year by a series of geopolitical tensions and can ill afford higher input costs.
Retailers, analysts and economists are questioning how much more uncertainty and volatility agricultural operations will be able to absorb before fertilizer demand falls, soil is depleted and harvests suffer.
“Whether it’s a tariff, a tax or a supply constraint, all those things turn into costs that pile up on farmers’ acres, and just further challenge farm gate economics,” said Kreg Ruhl, vice-president of crop nutrients for Growmark, one of North America’s largest agricultural retailers and farmer co-operatives.
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The Strait of Hormuz is the only route to the open ocean for Gulf-based exporters and is consequently a chokepoint for a number of critical resources, including exports of, and inputs for, two essential fertilizers: nitrogen and phosphate.
Nitrogen is the most critical nutrient for growing crops. The fertilizer plays a crucial role in photosynthesis and manufacture of proteins, and is used to grow about 50 per cent of the food consumed across the globe. It is used mainly in the form of urea, an organic compound.
Around 30 per cent of globally traded urea passes through the Strait of Hormuz, according to Scotiabank.
Ships containing inputs essential to the production of nitrogen are also stalled. About one-third of liquefied natural gas exported globally passes through the strait, and 20 per cent of traded ammonia.
In addition, Israel provides natural gas to Egypt, which accounts for just under 10 per cent of global urea production. Israel declared a state of emergency Sunday, and when this happens the state typically shuts down its gas fields, said Ben Isaacson, an Equity Research Analyst at Scotiabank.
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A blockage at the strait compounds production shortfalls. Iran is responsible for 10 per cent to 12 per cent of urea exports, Mr. Isaacson said.
Phosphate is also in a perilous position. It is important to plant-root development, stem strength and flower formation. Roughly 22 per cent of global finished phosphate fertilizer exports ship through the Strait of Hormuz, and 45 per cent of sulphur exports. Sulphur is essential to phosphate production.
In response to the crisis, urea prices have climbed 27 per cent, ammonia 16 per cent, phosphate 6 per cent and sulphur 7 per cent. Buyers have stepped back from the market, according to Scotiabank, which is why some prices have not soared to expected highs.
The timing for these price hikes is unfortunate for farmers across North America, said Casper Kaastra, chief executive officer of Montreal-based farmer co-operative and retailer Sollio Agriculture.
The spring season is when most fertilizer is purchased by farmers. Inventory is not the major concern for retailers, Mr. Kaastra said. Supplies for spring are purchased starting in the summer.
The problem is pricing.
What to know about the Strait of Hormuz
Excessively expensive fertilizer is a cost few farmers can afford. Prices for phosphate were already near record highs, driven in part by threefold increases in the cost of sulphur across 2025. (Sulphur is a byproduct of oil production. Russian oil production has been low because of the war with Ukraine.)
Simultaneously, prices for major crops such as corn, soybean, wheat and canola are depressed.
A huge 2025 harvest is partly to blame for the low prices. However, trade tensions haven’t helped matters. U.S. President Donald Trump’s battle with one of the largest oilseed importers in the world – China – eliminated American exports to the country until late October, and Ottawa’s nearly year-long trade dispute with Beijing over canola cut off a $5-billion market for Canada’s most lucrative crop.
Facing this uncertainty and high prices, farmers delayed purchases in the fall, Mr. Ruhl said, noting that Growmark’s sales of phosphate and potash were down 20 per cent. But with spring arriving, farmers cannot delay further.
To cover the high cost of nitrogen, demand destruction – a severe reduction in demand – for other crop inputs is likely, Mr. Isaacson said. This includes demand for the last of the three major fertilizers, potash.
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Canada is the king of potash production. Ten mines across Saskatchewan churn out more than 30 per cent of worldwide potash. While exports do not pass through vulnerable areas on their way to markets in North America, South America and Asia, the crisis will impact sales because potash is a discretionary crop input, Mr. Isaacson said. Nitrogen is mandatory. Farmers are likely to cut back on potash purchases to afford nitrogen.
The question now is timing.
Facing huge economic challenges – and with no end to geopolitical uncertainty in sight – farming is at present a bleak business.
In the U.S., bankruptcies were 46 per cent higher in 2025 compared with 2024. Canadian farmers are not as acutely vulnerable and can handle short-term crisis, said Mr. Kaastra, but it is a different question long term.
“Demand destruction can only go so far before it starts to cut into productivity and the ability of farmers to actually produce crops to feed the population.”
The longer the war continues, the more likely farmers are to underapply nutrients like phosphate and potash, Mr. Ruhl said. These nutrients are stable in the soil. Farmers will overapply when prices are low and underapply when prices are high.
“It’s like a savings account,” said Mr. Ruhl. “The balance changes.”
But fertilizer prices have been volatile for years, starting with 80-per-cent hikes because of pandemic-related production shutdowns and reaching historic highs after Russia invaded Ukraine in 2022.
The “million-dollar question” is how much longer the soil can be mined without steady replenishment of nutrients, Mr. Ruhl said. When the soil is depleted, it will lead to lower yields, and less food.
Estimating soil health is a complicated equation and guessing how long the soil will hold up is nearly impossible, said Mr. Ruhl. It is determined by the type of soil, the weather and the type of crop planted.
“How long will this take to become a problem?” asks Mr. Ruhl. “My answer is: We’ll probably know after it happens.”