When the US and Israel lunched their attack on Iran in early March the hope was that the conflict would be short-lived.
Those hopes have been long-since dashed, with both sides in the conflict appearing to be no closer to finding a resolution.
For Irish (and global) agriculture, the fallout from the closure of the Strait of Hormuz since the outbreak of hostilities has been both instant and multifaceted.
While the rise in fuel and fertiliser prices has been well documented – and felt by farmers – it is becoming increasingly clear that those price increases are unlikely to reverse in the short term, and very unlikely to return to their pre-conflict level.
The Government has introduced measures to help with the increase in the cost of agricultural diesel, and there are increasing signs that fertiliser may be given a temporary exemption from the much-maligned Carbon Border Adjustment Mechanism (CBAM) by the European Commission.
However, such measures are about reducing the amount of extra tax farmers will have to pay for those products. Neither helps with the underlying commodity price, nor do they do anything about availability of supply.
Right now, governments around the world are competing for supplies of both fuel and fertiliser. On the fuel side, there is some luck in the timing of the conflict. European diesel and natural gas demand are at seasonal lows as the region heads into the summer period when heating needs are reduced. This is the time of year where restocking generally happens, and that can be delayed if necessary.
This restocking delay, coupled with the high prices at the pump, has led to some reduction in need, with global oil demand tracking to drop by an average of 4.2 million barrels per day in April. There have also been releases of strategic oil reserves to the market to make up for the oil that is not been delivered from the Gulf region.
On the fertiliser side, again European farmers have been generally lucky with the timing
The trends are helping to keep a lid on commodity prices, but in the case of both restocking oil and gas reserves ahead of next winter and replenishing strategic reserves, they are demand delayed, rather than demand destroyed. This means that when the Strait finally does open, there will likely be a rebound in demand which will keep prices higher for longer.
On the fertiliser side, again European farmers have been generally lucky with the timing as many had purchased nutrients ahead of the introduction of CBAM. The problem faced now is that countries in Asia are moving away from their traditional Gulf supply base as they try to secure deliveries from where ever they can be sourced.
India, one of the world’s largest fertiliser importers, has been shopping North Africa to meet its demand, while other east and south Asian nations have also looked to increase partnerships with countries like Morocco, Egypt and Algeria.
Those North African supplies have long been a source for European importers, and the increased competition in that market comes as the Russia option is increasingly closed to EU importers. In 2025, the EU imported 6.36 million tonnes (mt) of fertiliser from Russia, with 2.5mt of that in the first four months of the year. In the same period in 2026, EU imports of fertiliser from Russia had dropped to 860,000t, driven by both the CBAM taxation and the penal tariffs introduced on Russian supply in 2025.
This leaves little option for European importers, particularly those in Ireland where there is no domestic manufacturing.
On the manufacturing side within Europe, we can take a look at the latest results from Yara to get an idea of the price (and supply) outlook. The company said that in the first three months of this year earnings in Europe grew by 54% which the company said was “driven by higher fertiliser prices”. On the outlook, the company said that structural loss of product from both the closing of the Strait of Hormuz as well as the loss of Russian production through drone strikes, increases the tightness of supplies which already existed before the conflict in the Middle East began.
Over the medium term, Yara said the amount of planned global investment in capacity is comparable to historic demand growth for nitrogen
That shortage was added to by the curtailment of Indian nitrogen production due to gas shortages in March.
Over the medium term, Yara said the amount of planned global investment in capacity is comparable to historic demand growth for nitrogen. This suggests that global supplies of that product may remain tight for years.
It is no wonder that this week ICOS has warned that its members are struggling to maintain supplies to their farmers.
Fears about the effects of the conflict in Iran are coming to pass. The two-month blockade of the key shipping route is starting to change the face of the global fertiliser industry, and storing up future further fuel shortages and price rises.
Government measures, and proposed measures, will go some way to easing the blow from the price increases but they cannot change the underlying market dynamics, and they go no way towards increasing availability.
Last week Edward Carr, in his role as ICOS president, noted that 2026 was already shaping up to be a difficult year for many farmers. Milk prices are significantly below where they were 12 months ago, and the tillage sector continues to struggle.
This means that the ability to swallow the higher input prices is way lower than where it would be had output prices been higher.
For farmers now facing higher for longer input prices, the only option is to be ruthless in cost management, and to hope that they can survive the pressure longer than food producers elsewhere in the world, which would allow prices to increase to meet surging costs.
SHARING OPTIONS