Sven Tore Holsether, president and chief executive officer of Yara International, has warned that the conflict involving Iran could have severe consequences for global food security, putting up to 10 billion meals a week at risk due to disruptions to fertiliser production and shipping.
Speaking to the BBC, Holsether said hostilities in the Gulf have blocked shipping through the Strait of Hormuz, a critical route for fertilisers and energy, undermining the global supply of nitrogen fertiliser essential for crop production.
“We’re up to half a million tonnes of nitrogen fertiliser not being produced in the world right now,” he said. “That could mean up to 10 billion meals a week that will not be produced as a result of the lack of fertilisers.”
Holsether warned that reduced fertiliser application could cut yields of some crops by as much as 50% in the first season, with the biggest impact falling on poorer countries and smallholder farmers least able to absorb higher input costs.
Strong Q1, but risks building
The warning came just days after Yara reported strong, better‑than‑expected first‑quarter 2026 results, underpinned by favourable nitrogen margins and higher deliveries.
The Norwegian fertiliser producer posted EBITDA excluding special items of $896m, up 40% year on year, while earnings per share rose 60%. Return on invested capital doubled to 12.2%, exceeding Yara’s through‑the‑cycle target of 10%.
However, management was clear that the first‑quarter performance largely reflects pre‑war market conditions and does not yet capture the full impact of the Middle East conflict, which has disrupted global fertiliser markets since late February.
“The blockage of the Strait of Hormuz disrupts around one‑third of globally traded urea, while also affecting ammonia, phosphates, sulphur and gas,” Holsether said on Yara’s earnings call. Fertiliser prices have risen sharply since the conflict escalated, with global urea prices up 47% since February, compounding pressure from already weak crop prices.
Demand destruction a growing concern
Yara executives stressed that the immediate risk is not production at the company itself, but demand erosion later in the year as higher fertiliser prices collide with stretched farmer economics.
Small reductions in fertiliser use could have outsized yield impacts, particularly in regions where yield response curves are steep. “Those hardest hit will be smallholder farmers in poorer parts of the world,” Holsether said.
CFO Magnus Krogh Ankarstrand said Yara’s operations are currently running “at full speed” and have not experienced major disruptions, supported by ammonia import capabilities and global logistics flexibility. Around 75% of European finished fertiliser production can be maintained using imported ammonia if local gas prices become uneconomic.
Food prices: not yet, but coming
While fertiliser prices have surged, analysts say the impact on consumer food prices is unlikely to be immediate.
“The biggest risk is not immediate,” analysts and agronomists told Reuters, noting that fertiliser price shocks typically take months to filter through planting decisions and into final harvests.
Across Asia, where rice production is dominated by smallholders, decisions taken this planting season will determine yields later in the year. Analysts warn that food price inflation is more likely to emerge towards the end of 2026 or into early 2027, once reduced fertiliser use translates into lower output.
S&P Global analysts have highlighted a growing disconnect between soaring fertiliser prices and lagging crop prices, while the World Food Programme has cautioned that higher input costs are likely to be passed through to food prices next year as supplies tighten.
Commodity‑specific exposure
Analysts say the lagged impact will vary by commodity. Rice in South and Southeast Asia is viewed as most exposed to reduced urea application, wheat markets could face tighter supplies in the 2026/27 season if fertiliser use is cut during autumn planting, while mycoprotein and other fermentation feedstocks may see cost pressure later as higher nitrogen prices filter through upstream agricultural raw materials.
