Fertilizer prices near 2022 highs as war in Iran squeezes natural gas

MIT Technology Review's climate newsletter The Spark traces this year's fertilizer price spike to the war in Iran. Natural gas is both the energy source and the chemical input for making ammonia, a core fertilizer ingredient, so when gas prices spiked because of the war, fertilizer prices followed. Fertilizer production is also a meaningful climate problem in its own right, accounting for about 2% of global greenhouse-gas emissions. Trade has been hit directly too: about one-third of global seaborne fertilizer trade passes through the Strait of Hormuz, which the conflict has effectively closed to commercial shipping. A World Bank report cited in the piece warns that access to fertilizer could worsen for some of the world's poorest countries as a result. The US mostly meets its own nitrogen-fertilizer demand domestically, though it still imports some from the Persian Gulf. At one point in April, urea, the most widely used fertilizer, climbed above $850 per metric ton, 80% higher than before the conflict and the highest level since 2022, when Russia's invasion of Ukraine last drove fertilizer costs to record highs. Prices have since eased, but a CoBank report says some fertilizer prices could stay elevated through at least 2028, partly because the damage is lasting: 31 ammonia plants in the Middle East have been affected or shut down by the war, on top of 20 already damaged in Russia in recent years. Travis Frey, chief technology officer of Pivot Bio, which makes fertilizer from genetically edited microbes, describes an "out-of-control supply chain that's a lot more volatile than it's ever been." Pivot says its products are already cost-competitive with chemical fertilizer and, since they skip natural gas entirely, are insulated from these price swings; when the war began, the company increased planned production, cut prices, and started letting farmers lock in prices for three years. Tim Schnabel, founder and CEO of rival Switch Bioworks, makes the stakes plain: fertilizer price spikes hit farmers hard because their margins are already paper-thin, and higher costs ripple into higher food prices for everyone, on top of separately volatile diesel prices farmers also face this year. Neither company's microbes can fully replace synthetic fertilizer yet: Pivot says its products currently substitute for about 25% of synthetic fertilizer depending on the crop and conditions, with a company goal of 40% to 50%. Schnabel argues the dependency itself is the problem: "We can't keep doing it like this. There's no way we can build a society where the basis of the food chain depends on fossil fuels."

Key facts

Urea, the most widely used fertilizer, topped $850 per metric ton in April, 80% above its pre-conflict price and the highest level since the 2022 spike caused by Russia's invasion of Ukraine.
About one-third of global seaborne fertilizer trade passes through the Strait of Hormuz, which the war in Iran has effectively closed to commercial shipping; a World Bank report warns this could worsen fertilizer access for the poorest countries.
The war has affected or shut down 31 ammonia plants in the Middle East, on top of 20 already damaged in Russia in recent years; a CoBank report projects some fertilizer prices could stay high through at least 2028.
Pivot Bio, whose fertilizer uses genetically edited microbes instead of natural gas, says its products are already cost-competitive and let it offer farmers three-year price locks; it currently replaces about 25% of synthetic fertilizer, with a goal of 40% to 50%.
Fertilizer production itself accounts for about 2% of global greenhouse-gas emissions, and rival microbe-fertilizer maker Switch Bioworks argues food supply should not depend on fossil-fuel inputs at all.

Why it matters

Fertilizer pricing is now hostage to a war half a world away from most farms, because ammonia production runs on natural gas and a third of seaborne fertilizer trade funnels through a single strait that conflict can close. That link means a geopolitical shock in the Middle East shows up first as a farm-input cost and eventually as a grocery bill, with the World Bank warning the poorest, most import-dependent countries stand to lose fertilizer access first.

Who it affects

Farmers absorb the direct hit, and the newsletter stresses their margins were already thin before this year's spike; consumers pay the second-order cost through higher food prices. Import-dependent poorer countries face the sharpest exposure per the World Bank's warning, while the US is comparatively insulated since it covers most of its nitrogen-fertilizer demand domestically. The disruption also creates an opening for microbe-fertilizer makers Pivot Bio and Switch Bioworks, whose gas-free products suddenly look more competitive.

How to use it

Pivot Bio says its microbial fertilizer is already cost-competitive with chemical fertilizer and, because it does not rely on natural gas, does not move with gas-price swings; the company has responded to the war by increasing planned production, cutting prices, and offering farmers three-year price locks. That is a real hedge against further volatility, but only a partial one: Pivot says its products currently substitute for about 25% of synthetic fertilizer depending on crop and conditions, aiming for 40% to 50%, so it cannot yet replace conventional fertilizer outright.

How solid is it

The piece leans on named third-party reports, the World Bank on trade-route risk and CoBank on the price outlook through 2028, plus verifiable market figures like the $850-per-metric-ton peak and the 80% increase. The claims specific to Pivot Bio and Switch Bioworks, cost-competitiveness, replacement percentages, production increases, come directly from the companies themselves rather than from independent verification, and both have an obvious commercial stake in the fossil-fuel-fertilizer story looking bad.

Risks and caveats

The article does not give a current market price for either company's microbial fertilizer, nor does it explain the mechanism by which the microbes supply nitrogen to plants, so the competitiveness claims are hard to independently check. It also does not quantify how much food prices have actually risen from the fertilizer spike, or name which countries beyond the unspecified Middle East and Russia have lost ammonia capacity. Prices have already come down from the April peak, and the piece itself notes forecasts remain uncertain, so the worst of the spike may not recur even without the microbial alternatives scaling up.

“The fertilizer price spikes, and because farmers have paper-thin margins, this is a real problem”

— Tim Schnabel, founder and CEO of Switch Bioworks