Cheap Fertilizer Means Nothing If It Doesn’t Arrive

What the latest IFA report means for fertilizer importers, exporters and large farms

Fertilizer markets are no longer driven by supply and demand alone. Energy prices, geopolitics, shipping disruptions, trade restrictions and the transition to lower-carbon production are increasingly interconnected.

That is the central message of the International Fertilizer Association's July 2026 report, Fault Lines and Green Lines: Energy, Food Security, and the Geopolitics of the Sustainability Transition.

For fertilizer importers, exporters and large agricultural producers, the implication is clear: fertilizer supply risk needs to be managed as a strategic business risk, not simply a procurement issue.

Recent history shows why. In 2022, soaring European natural-gas prices forced large parts of the continent's ammonia industry to shut down or reduce production. The European Commission reported that 70% of EU ammonia production capacity was shut down in August 2022, while nitrogen fertilizer prices rose sharply.

Here are five practical lessons.

1. Make geopolitical risk part of procurement

The traditional procurement question is: which supplier offers the best price?

The events following Russia's invasion of Ukraine demonstrated why that is no longer enough. Belarusian potash exports fell by more than 50% in 2022, while China's DAP and urea exports also fell sharply after export restrictions were introduced. IFPRI estimated that fertilizer export restrictions affected around 20% of global fertilizer trade at one point in 2022.

For importers, this means supplier diversification should be measured by more than the number of vendors on a procurement list. The important question is whether alternative suppliers can actually replace the lost volume when a major producer or origin becomes unavailable.

For example, if a business normally sources 60% of its urea from one country, it should know how much of that volume could realistically be replaced within 30, 60 or 90 days.

Large farms face the same issue. Depending heavily on one importer, distributor or country creates concentration risk even when the supplier has performed reliably for years.

The objective is not to eliminate concentration. It is to know exactly where it exists and what replacing it would cost.

2. Build logistics redundancy

Fertilizer security is not just about production. It is also about getting the product to the customer.

The Red Sea disruption provided a clear example. Attacks on commercial vessels in 2024 forced ships to divert from the Suez Canal around the Cape of Good Hope, increasing voyage times and putting upward pressure on shipping costs. The World Bank warned that further disruption could affect fertilizer and agricultural markets.

The fertilizer industry experienced this directly. Argus reported longer journey times and higher logistics costs across ammonia, potash and sulphuric acid markets during the Red Sea disruption, with the Panama Canal's restrictions adding another layer of complexity.

For an importer, the lesson is straightforward: your supply chain does not end when the fertilizer leaves the producer.

A resilient procurement strategy needs to consider alternative ports, shipping routes, storage locations and inland transportation.

For large farms, the same principle applies to inventory. The right stock level is not necessarily the lowest possible level. It is the level that provides adequate protection against realistic supply disruptions without unnecessarily tying up working capital.

Logistics flexibility can be worth more than a small reduction in purchase price.

3. Stress-test fertilizer procurement

The European energy crisis of 2022 provides perhaps the clearest real-world example of why fertilizer procurement needs scenario analysis.

As European gas prices surged, fertilizer production became uneconomic at many plants. Yara reduced ammonia production, while companies including Grupa Azoty, Achema and CF Fertilisers also curtailed production.

The result was not simply higher fertilizer prices. Farmers also faced uncertainty over availability and had to reconsider purchasing and planting decisions. The European Commission reported that nitrogen fertilizer prices were 149% higher year-on-year in September 2022.

For today's fertilizer businesses, this is a useful template for stress-testing procurement.

What happens if fertilizer prices rise 20%? What if they rise 50%? What happens if the largest supplier is unavailable for three months? What happens if freight rates rise at the same time that fertilizer prices increase?

For large farms, the analysis should go one step further. Instead of looking only at fertilizer price per tonne, calculate fertilizer cost per unit of crop output.

The cheapest product is not necessarily the cheapest production strategy if it results in lower nutrient-use efficiency or yield.

4. Diversify the nutrient strategy

The IFA report does not frame the agricultural transition as a choice between conventional fertilizer and alternative agriculture. It highlights a broader portfolio that includes enhanced-efficiency fertilizers, biological inputs, precision agriculture, nutrient management and soil-health practices.

There are already commercial examples of this approach.

Yara and John Deere have combined agronomic recommendations, satellite-based crop monitoring and variable-rate application technology. Yara reports trials showing potential yield increases of up to 7% alongside nitrogen savings of up to 14%.

These examples illustrate an important shift: the objective is not simply to use less fertilizer, but to get more output from every unit of nutrient.

For large farms, better soil testing, application timing, variable-rate technology and enhanced-efficiency products can reduce exposure to fertilizer costs while protecting productivity.

For fertilizer companies, it also creates an opportunity to move beyond selling tonnes and provide agronomic and digital services around the product.

5. Start building fertilizer traceability data

Traceability is already moving from a sustainability concept toward a commercial requirement.

Yara, for example, says it has calculated product carbon footprints for more than 1,500 finished products and uses third-party assurance to verify its calculations. Its customers can use the resulting product carbon footprint information to support their own Scope 3 reporting.

There is also evidence that this data is beginning to move through the food chain.

In Brazil, Yara supplied Cooxupé, one of the country's largest coffee cooperatives, with lower-carbon fertilizer in 2024. Yara stated that the product had a carbon footprint up to 90% lower than comparable fertilizer produced using fossil natural gas.

Yara has also partnered with PepsiCo Europe on crop nutrition programs designed to improve nutrient-use efficiency and reduce the carbon footprint of crops. The agreement covers up to 165,000 tonnes of fertilizer per year by 2030.

The message for fertilizer importers, exporters and large farms is that product information is becoming part of the value proposition.

Knowing the fertilizer's origin, production pathway, application rate and associated emissions can increasingly help businesses respond to customer requirements, sustainability reporting and emerging market standards.

Resilience is becoming a competitive advantage

The fertilizer industry has traditionally optimized around price, availability and logistics.

The next generation of procurement will need to consider price, availability, logistics, geopolitical exposure, nutrient efficiency and traceability together.

The real-world events of the past few years show why. Gas prices can shut fertilizer plants. Geopolitical events can disrupt major suppliers. Shipping disruptions can add weeks to voyages. And customers are increasingly asking for better information about the environmental footprint of agricultural products.

The companies that perform best during the next fertilizer-market disruption may not be those that predicted it correctly.

They will be the companies that can continue operating when their prediction is wrong.

In an increasingly volatile fertilizer market, resilience is becoming a competitive advantage.