What the Hormuz Crisis Teaches Us About Agriculture’s Strategic Vulnerability

Roughly 30% of globally traded fertilizer has been trapped behind the Strait of Hormuz since U.S. and Israeli strikes on Iran triggered a military blockade in late February. Months on, the resulting price shock is reviving a question the world last asked over a century ago: what happens when the raw materials that feed the planet run through a chokepoint? 

In a landmark address in 1898, chemist Sir William Crookes warned his fellow scientists that access to imported nitrate could be cut off during a conflict, with devastating consequences for fertilizer and munitions production. At the time, nitrate came almost exclusively from Chile as mined sodium nitrate (saltpetre). Crookes called on the world’s chemists to find a way to fix atmospheric nitrogen artificially, thereby breaking the dependence on imports. The challenge reverberated across Europe and was taken up most urgently in Prussia, where strategists recognized the vulnerability of Atlantic trade routes to British naval blockade. Subsequent investment by chemical giant BASF led to industrial scale-up of the Haber-Bosch process, an effective replacement for mined nitrates and the main method still used today to produce nitrogenous fertilizers. 

One hundred and twenty-eight years later, commercial shipments through the Strait of Hormuz ground to a halt for months because of attacks by the United States and Israel against Iran. The world once again faces shortages of imported nitrates caused by the military blockade of trade routes. This time, the key commodity affected is not saltpetre but natural gas, the main chemical feedstock used in the Haber-Bosch process to fix atmospheric nitrogen and manufacture fertilizer. 

Will today’s crisis lead to the same push for fertilizer diversification and innovation as occurred in the early 1900s? The stakes suggest it should. The crisis exposes two distinct but related vulnerabilities: a strategic one, in which food production depends on fossil fuel supply chains in geopolitically unstable regions, and an environmental one, in which the very fertilizers those chains supply are themselves a driver of climate change. 

Why Nitrogen Fertilizer Matters 

Nitrogen is an essential element for plant growth. While some plants (mainly beans, peas, and alfalfa) can draw nitrogen directly out of the atmosphere, most crops absorb nitrogen from the soil. Farmers the world over use nitrogenous fertilizers to replenish soil nitrogen and maintain agricultural yields. Nitrogen fertilizers can be produced using both biological (manure, sewage, and some plant wastes are sources of nitrogen) and synthetic processes. Synthetic fertilizers have come to be preferred by many farmers due to their guaranteed available nutrient content and ease of application. 

Today, synthetic nitrogen fertilizer comes from chemical factories located near sources of natural gas. Export-oriented production occurs mainly in Russia, Qatar, and Saudi Arabia, countries with abundant natural gas reserves. China is also a major producer, using both coal and natural gas as feedstock. 

Trade disruptions associated with the Russian invasion of Ukraine had already pushed global fertilizer prices up. With the near-complete blockage of the Strait of Hormuz between the end of February and through the month of June until the time of writing, an acute supply-side crisis developed. Approximately 30% of globally traded fertilizer became trapped behind the Strait, and the blockade cut off not just finished fertilizer, but the raw inputs needed to make it elsewhere. Nitrogen fertilizer factories in India and Pakistan were forced to cut production when supplies of natural gas from Qatar dried up. The World Bank reports that global nitrogen (urea) prices climbed above USD 850 per tonne in April, up 80% since February and the highest level since April 2022. 

The Food and Agriculture Organization of the United Nations (FAO) has warned that a prolonged blockage of the Strait could seriously threaten food security. Developing economies with limited agricultural policy support and little domestic fertilizer production are likely to face the greatest risks as fertilizer prices rise. Many African countries have long struggled with low nitrogen fertilizer use and, as a result, low crop yields. Further reductions in fertilizer use by African farmers could constrain food supplies and drive up food prices, hitting food-insecure communities the hardest. 

Farmers and consumers in parts of Europe, Asia, and North America, on the other hand, are receiving direct government support to help soften the immediate impact. India has enhanced its fertilizer subsidy budget. The United States has rolled out large agricultural subsidies meant to offset rising costs for all agricultural inputs, along with regulatory support to new conventional fertilizer plants. The European Union’s Fertilizer Action Plan paves the way for direct fertilizer subsidies by member states, among other policy measures. 

Other countries are attempting to address impacts through trade policy. China and Russia are shielding their farmers from high prices by restricting fertilizer exports. These beggar-thy-neighbour trade policies keep domestic prices low while exacerbating price impacts elsewhere. International organizations are calling out governments for these measures, with the FAO asserting that export restrictions “intensify shortages, increase market instability, and disproportionately hurt poorer import-dependent countries.” Export restrictions are also costly to those implementing them. Though this cost manifests itself as export revenue foregone rather than direct budgetary expenditure, it is no less real. 

No government can afford to indefinitely offset the loss of access to cheap, abundant nitrogen fertilizer produced from natural gas. While the current crisis may be temporary, the structural dependence is not—and recent conflicts in Ukraine and the Middle East have confirmed that the vulnerability identified by Crookes in 1898 still exists. Breaking this dependence will require more than emergency subsidies and trade policy workarounds; it will require revisiting technological alternatives that, as history shows, already exist. 

Back to the Future: Revisiting renewable nitrogen fertilizer 

The technological breakthrough needed to eliminate fossil fuel inputs from synthetic nitrogenous fertilizer production occurred more than a hundred years ago. In 1921, the first viable commercial rival to the conventional Haber-Bosch process was introduced by the Italian chemist Luigi Casale, who showed that it was possible to synthesize ammonia from the electrolysis of water. The only chemical byproduct of this reaction is oxygen gas, in contrast to ammonia production from fossil feedstocks, which releases large amounts of CO2. 

Electrolysis of water to produce ammonia takes a lot of electricity. In the first couple of decades following its discovery, electrolysis was used by countries with abundant hydro, solar, or wind power to produce nitrogen fertilizer. By the late 1920s, there were renewable ammonia plants operating in Italy, Spain, France, Norway, the United States, and Japan, and, as of 1930, electrolysis-based plants accounted for about 30% of global ammonia production. However, with the emergence of abundant low-cost natural gas and large-scale gas-based technologies in the 1960s and 1970s, fossil fuels became relatively cheaper to use than electrolysis, and most renewable fertilizer factories converted to fossil feedstocks or closed down. The large-scale, export-oriented, fossil-based fertilizer industry was born, and it has dominated global fertilizer markets ever since. 

As of this year, there are two commercial-scale electrolysis-based ammonia plants in operation. The first is owned by Yara International of Norway and uses mainly hydropower. The second, over 10 times as large, belongs to Envision Energy of China and uses wind and solar power. Taken together, the output of these two plants accounts for less than 0.5% of total global ammonia production. 

Switching from fossil feedstocks to electrolysis has the potential to eliminate the greenhouse gas emissions associated with ammonia production, as well as the dependence of the fertilizer industry on fossil fuel supply chains. For renewable ammonia-based fertilizers to compete effectively with their fossil-based counterparts, however, several key barriers would have to be overcome. The most important of these is cost. International Energy Agency's Ammonia Technology Roadmap found that near-zero-emission ammonia production routes are typically 10%–100% more expensive per tonne than conventional routes, depending on energy prices and other regionally varying factors. 

As was the case in the 1920s, regions with large renewable energy potential could have a competitive advantage in green ammonia production. Critically, this now includes some of the regions currently most dependent on fossil-based fertilizer imports, such as southern Europe and much of Africa, which have abundant solar or hydropower potential. 

Governments have a role to play in catalyzing the growth of this industry through policies including effective carbon pricing, investments in clean electricity systems, and short-term market supports, such as capital expenditure subsidies or offtake agreements with green fertilizer manufacturers. These measures will help narrow the cost differential between green and grey ammonia. 

Renewable ammonia is not a panacea, however. Switching feedstocks eliminates the strategic vulnerability and the production-side emissions, but it does nothing to address what happens after fertilizer leaves the factory—and that, it turns out, is where much of the environmental impact occurs. 

Toward Sustainable Nitrogen Use in Agriculture 

Nitrogen fertilizer overuse in agriculture leads to a host of problems, including the growth of toxic algae in freshwater lakes, groundwater contamination, and perhaps most concerningly, large-scale nitrous oxide emissions. Nitrous oxide is a greenhouse gas roughly 300 times more potent than carbon dioxide. It is released when excess nitrogen reacts with soil microbes. Emissions released after fertilizer is applied to fields are roughly 1.5 times greater than emissions from manufacturing the fertilizer. Switching from grey to green ammonia does nothing to address the emissions associated with nitrogen overuse, because these two “types” of ammonia are chemically identical, meaning that when they are released into the environment (i.e., spread onto a field), they behave the same way. 

The need for more targeted, judicious use of nitrogen fertilizer is an issue on which there is a rare degree of unanimity among farmers, policy-makers, and fertilizer manufacturers. As the price of fertilizer rises, the push for efficiency increases. The International Fertilizer Association, along with numerous farmer organizations, is backing a major global campaign promoting the 4Rs of fertilizer use (Right Source, Right Rate, Right Time, Right Place) that helps ensure fertilizers applied to the soil are taken up by plants, along with other practices, such as cover cropping, that enhance soil fertility and reduce the need for synthetic fertilizer. 

Achieving precise, targeted use of fertilizers is not as easy as it sounds, however. Farm-level training and technology adoption are often needed, and funding for this may be lacking. 

Government and industry now have the opportunity to put in place the policies and make the investments that will result in the long-term resilience of food systems. The response must work on two fronts simultaneously. On the supply side, loosening the ties between soil fertility and natural gas requires public–private investments in renewable electricity and ammonia technologies, supported by effective carbon pricing and market instruments such as offtake agreements that help green ammonia compete with its fossil-based equivalent. On the demand side, reducing how much nitrogen fertilizer is needed in the first place—through adoption of the 4Rs, cover cropping, and other soil health practices supported by agricultural extension services—cuts both costs and emissions regardless of where the nitrogen comes from. For many countries today, as was the case in the aftermath of Crookes's 1898 warning, the strategic national interest lies in a fundamental shift: not just in where fertilizer comes from, but in how much of it we need.

Darcie Doan is a senior specialist in trade and climate at the International Institute for Sustainable Development.

The views expressed in this article are those of the author(s) and do not necessarily reflect those of IISD.