Two months after a major escalation closed the Strait of Hormuz to commercial traffic, the global fertilizer market is doing something it rarely does: pricing in a slow-burn food crisis before that crisis has visibly arrived. Egyptian FOB granular urea, a global bellwether, has moved from roughly $400-$490 a tonne pre-conflict to around $700, a roughly 50% rise in barely a quarter [CNBC, March 2026]. By the UN’s count, around one-third of seaborne fertilizer trade flows through Hormuz, and roughly 1.3 million tonnes per month of fertilizer cargoes are not currently transiting [UN News, April 2026].

For oil and gas, the headline is volatility. For fertilizer, the headline is a delivery problem with a six-to-nine-month tail, and that tail matters more than the spot price.

Why this is a slower, deeper shock than 2022

The arithmetic of nitrogen scarcity is brutal for low- and middle-income food systems. About 30% of global urea exports originate in the Hormuz-constrained corridor, Iran, Saudi Arabia, Qatar, Bahrain, and complementary disruptions have stacked on top: China extended urea export restrictions and Russia suspended ammonium nitrate export licences into late April [FAO Agrifood Policy Highlights, April 2026]. Smallholders cannot cost-effectively reformulate nutrient programmes mid-season. A tonne of nitrogen they cannot afford in May becomes a yield gap they cannot recover in October.

The geography of pain is sharper than the headline. The World Bank flags that sub-Saharan median inflation is likely to move from 3.4% in 2025 to roughly 5% in 2026 if input prices stay where they are [World Bank, April 2026]. UNCTAD has named Sudan, Somalia, Mozambique, Kenya and Sri Lanka as the highest-exposure cases, countries where fertilizer import dependence intersects with constrained reserves and existing food insecurity [UNCTAD, March 2026]. Egypt, Pakistan and Bangladesh are not on that list yet, but their balance sheets will tell us by Q3 whether they should be. A 5% yield reduction on staple grains in a country running tight import cover is not a soft-landing scenario.

The political-economy response so far is the familiar mix: emergency subsidy windows, vouchers, and in some cases negotiated barter arrangements with the few exporters still moving product. None of this addresses the structural problem.

Pamoja Insights

The Hormuz event is being read as a price story. We think it is more accurately a structural exposure story, and the market is underpricing how durable the consequences are likely to be.

First, the second-order effects are the ones that bite. Yield contractions on the 2026 main season will not show up in trade data until late Q3, in price indices until Q4, and in political risk until Q1 2027. Capital allocators positioning on Q4 EM fundamentals are likely working on a calendar two quarters behind the agronomic clock.

Second, the durable response is domestic input manufacturing capacity, not import diversification. Most “diversification” announcements this year amount to swapping one seaborne lane for another. The countries that emerge structurally stronger from this episode will be the ones that finalise blending plants, granulation capacity, and gas-to-urea projects already on their books. Nigeria’s Dangote and Indorama assets are the obvious example; Morocco’s OCP and Egypt’s MOPCO sit on similar fundamentals. Where a sovereign already controls the gas, the binding question is whether the PPP framework around offtake, FX risk-sharing and tariff pass-through is good enough to mobilise the next $500m of private capital quickly. In most cases, it is not.

Third, mechanisation gains evaporate without affordable nitrogen. Yield uplift from better land preparation is a fraction of the uplift from adequate fertilizer. Operators selling tractor-hours to smallholders should expect demand softness in any region where urea has crossed roughly $700 a tonne CIF, farmers will rationally cut tillage spend before they cut seed and fertilizer spend. PPPs that bundle mechanisation with input finance, rather than offering them as separate products, are the ones that will hold revenue through this cycle.

Fourth, the multilateral response is structurally too slow for an input crisis. The World Bank’s $9bn-per-year food-security envelope and IFAD’s 60% Africa allocation through 2027 are necessary but operate on planning horizons of 18 to 36 months [FAO Global Appeal, 2026]. Fertilizer needs to move in weeks. Concessional working-capital lines to fertilizer importers, guaranteed by DFIs, intermediated through commercial banks, with tenors matched to the planting calendar, would close a gap that grant programmes cannot. We have not yet seen a vehicle of that shape announced at scale.

Fifth, this is a buying window for operators with the balance sheet to use it. EM agribusiness assets, particularly mid-stream fertilizer blending, irrigation, and grain handling, are trading on near-term margin pressure. The 24-month view is materially better, because every government in the affected zone is now actively writing cheques toward exactly these assets.

The question that matters

The question is not whether the Hormuz disruption ends. It is which countries, operators and capital structures finish 2026 with a stronger balance sheet than they started, and which finish it with a hole.

Sources

  • CNBC, “It’s not just oil and gas. The Strait of Hormuz blockage is rattling another vital commodity,” March 2026 — cnbc.com
  • UN News, “Clock is ticking: Hormuz disruption raises fears of global food crisis,” April 2026 — news.un.org
  • FAO Agrifood Economics, Agrifood Policy Highlights, April 2026 — fao.org
  • World Bank, “Global agricultural markets in 2026: stabilizing prices, persisting risks,” April 2026 — blogs.worldbank.org
  • UNCTAD, “From gas to grain: Fertilizer disruptions raise risks for food security and trade,” March 2026 — unctad.org
  • FAO Emergency and Resilience, Global Appeal 2026 — fao.org