The ongoing tensions in West Asia have affected fertilizer supplies. The closure of the Strait of Hormuz waterway due to the war has shut down fertilizer factories in West Asia and affected transportation. This is expected to affect agriculture in various countries. As farmers prepare to plant crops, major importers around the world may cut fertilizer supplies, according to international media reports. 

The Strait of Hormuz is the route through which about a third of the global chemical fertilizer trade and 20 percent of the world's total fuel consumption is supplied. Farmers from Srinagar in Kashmir, India, to Saskatchewan, Canada, depend on this fertilizer and fuel. Despite being a large domestic industry, the United States has been importing most of its fertilizer needs. However, with the outbreak of the Iran war, fertilizer prices have also risen in the United States. The price of fertilizer in New Orleans, known as the fertilizer import hub, had risen from $516 per ton to $683 on Thursday. Analysts told Reuters that fertilizer prices will rise further if the waterway remains closed and supplies do not meet demand.

Rising prices could force farmers to change crop choices and fertilizer use, says Seth Meyer, a former chief economist at the US Department of Agriculture and now at the Institute for Food and Agricultural Policy Research. “Farmers apply fertilizer to all crops to increase productivity, and it’s essential, but each crop and soil has different needs,” he said.

One of the world’s largest urea plants in Qatar has closed after the US and Israel jointly attacked Iran. Qatar Energy has lost a source of feedstock for chemical fertilizers by shutting down gas production. Other countries in West Asia have also cut sulfur production. These substances are used to make fertilizers.

India imports more than 40 percent of its urea and phosphatic fertilizers from West Asia. While imports may be affected, domestic production has already been affected, according to international media reports. Three Indian plants have already reduced urea production after a sharp drop in liquefied natural gas (LNG) supplies from Qatar.

China has also banned some fertilizer exports this year to avoid domestic shortages. On the other hand, European producers have cut fertilizer production due to the lack of cheap Russian gas supplies. This is why the price of urea has increased by about $80 per ton, compared to about $470 per ton before the Iran war, analysts say. They say China is likely to tighten fertilizer exports further.

China imports more than 50 percent of its sulfur from West Asia, while Indonesia relies on imports for about 70 percent of its supplies. Australia also relies on fertilizer imports. Sulfur is a key raw material for fertilizers such as DAP and monoammonium phosphate. “Nobody has any surplus fertilizer or raw materials to sell right now,” a Chinese sulfur trader told Reuters. 

Experts say that if the supply disruptions continue for a few weeks, fertilizer prices could reach their 2022 high. In 2022, the price of urea fertilizer on the global market reached $1,100 per ton. It is trading at $590 per ton on Tuesday. The price of DAP reached $1,100 per ton in 2022, and is trading at $650 per ton on Tuesday. 

As prices are rising in the global market, it is also seen that its impact will be felt in Nepal. Countries including Saudi Arabia, Qatar, Oman and the UAE in West Asia are major suppliers of urea, sulfur and ammonia. Iran is the third largest producer of ammonia, which is considered important for soil nutrients. If the conflict continues for months, experts say that disruptions in fertilizer production and transportation in the Gulf region during the crucial farming season could cause ripples in the agricultural sector as farmers around the world will not be able to get fertilizer. 

China's phosphate export ban and reduced sulfur production in Qatar are tightening the global fertilizer market at the same time. A Bloomberg report also said that Indian urea producers have started cutting production after the conflict disrupted the supply of liquefied natural gas from Qatar. Since natural gas is the main raw material for fertilizer production, disruptions in the Gulf gas market will further exacerbate the supply problem. 

According to the Financial Times, 35 percent of global urea and 45 percent of sulfur exports pass through the Strait of Hormuz waterway. They believe that if the crop planting season is disrupted, farmers may use less fertilizer or even plant crops that yield less. Experts say that the impact will be seen in the form of lower food production and higher food prices. 

India needs an estimated 2 million tons of various fertilizers every month. India is also 100 percent dependent on potash and 60 percent on DAP fertilizer imports. Despite being said to be self-sufficient internally, India has been importing urea fertilizer. With rising prices in the international market, suppliers have been hesitant to deliver, fearing losses due to the volatility between the price at which the bid is called and the market price at which it is supplied.

Nepal is also dependent on imports for chemical fertilizers. Every year, the government has been subsidizing fertilizer imports. Currently, there are no agreements with various companies to import chemical fertilizers, and even if there are, there is a growing possibility that fertilizers will not be imported or will not be available at all due to the war, said an official of the Agricultural Materials Company Limited. 

According to the Ministry of Agriculture and Livestock Development, there is a stock of 137,630 tons of fertilizers, including urea, potash, and DAP. However, the Ministry has stated that the Agricultural Materials Company Limited and Salt Trading Company Limited, which import and sell subsidized fertilizers, have stocks in their warehouses and have already loaded about 183,000 tons of fertilizers for Nepal. In this way, 45,370 tons of fertilizers are on the way. In addition, an agreement has been signed for an additional 92,000 tons of fertilizers. 

Joint Secretary of the Ministry of Agriculture Dr. Ramkrishna Shrestha says that with this quantity, there will be a smooth supply of fertilizers in the upcoming paddy season. He also said that out of the 300,000 tons of fertilizer agreed upon by the Ministry of Finance for the upcoming fiscal year 2083/84, a tender for 180,000 tons has been awarded and a contract for 90,000 tons is in the process of being awarded, and the notice of the remaining tender will be issued by mid-Chait. 

However, due to the current problems in West Asia, there may be some inconvenience in fertilizer supply, he informed that the ministry has discussed alternative measures to be taken in such a situation. ‘Generally, there is no shortage of fertilizer in the upcoming rice season,’ he said. He urged people not to buy and hoard fertilizer unnecessarily as alternative measures are being worked on to avoid fertilizer shortage.

The government has allocated a budget of 28.82 billion 14 million rupees to provide 550,000 tons of fertilizer as a subsidy in the current fiscal year. The government has been providing an average of 65 percent subsidy on chemical fertilizers. According to the ministry, although there is a demand for about 800,000 tons of fertilizer annually, the government has been providing fertilizer at a subsidy of about 500,000 tons. The remaining 300,000 tons of fertilizer are brought and sold by the private sector. But traders say that fertilizers are being imported from India due to the open market rather than the private sector.