March 2026
Many have already read about how the war in Iran and the closure of the Strait of Hormuz are disrupting global fertilizer and energy supply chains in the middle of US planting season. But zooming out, one can see that this is just the latest chapter in a pattern that’s been building for five years. With conventional agriculture’s high exposure to dramatic swings in input costs, the economic case for regenerative management becomes harder to ignore: not just as a long-term investment, but also as a prudent, near-term financial hedge.
A brief history of geopolitical shocks impacting the fertilizer market over the past five years:
- 2022: The Russia-Ukraine war temporarily spiked the nitrogenous fertilizer manufacturing market by 175+% to up to $767
- 2023/24: China restricted phosphate and urea exports
- 2024/25: US-China tariffs cut agricultural exports by 39%
- 2025: EU tariffs on Russian and Belarusian fertilizers took effect
- March 2026: China further tightened fertilizer exports in response to the Iran crisis
- Now, with one-third of all globally shipped fertilizer transiting the Strait of Hormuz, the Iran conflict has added another supply disruption on top of an already constrained market.
Fertilizer prices have settled at 40-60% above pre-pandemic levels and likely will go up further due to the war, impacting overall farm production expenditures as shown in the table below.
What this looks like in the field
The cost increases are hitting across several input categories at once:
- Urea, the most widely used nitrogen fertilizer in the world, is facing price increases of up 30–33%, from roughly $515 to $683/ton
- Phosphate and sulfur have also risen, with Saudi phosphate exports blocked through the strait
- Diesel has spiked 39% to over $5/gallon nationally
- The US imports about 25% of its total fertilizer use, so there is limited ability to source around the disruption quickly
We estimate the combined impact at about $57 per acre of additional cost on a representative conventional corn farm, on top of a forecasted loss of about $160 per acre on corn before the Iran conflict[i]. This is the fourth consecutive year of negative returns for corn growers. While the war isn’t creating a profitability crisis, it is deepening one that was already well underway.
Who’s most exposed
- Row crops: Corn and wheat farmers face the sharpest cost pressure because both crops are heavily fertilizer-dependent, constituting 33-44% of corn operating costs and 34-45% of wheat operating costs. Some experts expect continued acreage shifts toward soybeans, which require little synthetic nitrogen, though rising biofuel demand for corn may partially offset that trend.
- Permanent crops: Tree nuts are facing painful disruption. CA farm bureau representatives share the closing of the Strait has stranded tree nut shipments mid-transit, with the walnut industry estimating 10% of annual production was on route to Middle Eastern buyers when the war began. If they get re-routed or cannot ultimately be sold, this will impact carry-in rates and drive down pricing over time.
- Northern farmers: Geographically, northern-tier growers are most at risk. Most Midwest farmers had already applied fertilizer before the conflict began, but an estimated 10–20% of northern growers had not. They’re now buying at post-war prices with no ability to pass through the cost.
- Everyday consumers: Inflation is expected to reach 4.2% this year, up from 3% projected before the war. This increase in prices, due to rising fuel costs, will hit everyday consumers at the grocery store, where 8 of the top 15 food-at-home categories are expected to rise in price faster than their 20-year historical average of growth. Consumers will also feel it when eating out, where food-away-from-home prices are expected to rise 3.9% in 2026.
- Global food security: This is also a global issue. India, for example, sources 40% of its urea and phosphate imports from the Middle East. The food security implications extend well beyond the US.
Structural advantage of regenerative management
Every major geopolitical shock of the past five years has had one thing in common: it hits hardest on farms that depend heavily on globally traded inputs like synthetic fertilizer and diesel.
This is where regenerative agriculture offers a genuine structural advantage. Farms using regenerative practices typically use about 37% less synthetic fertilizer and 22% less fuel. Our internal analysis shows that on the same representative corn farm:
- Pre-war total input costs (fertilizer + fuel + crop protection) are roughly $112/acre lower under a regenerative system
- The war-driven cost increase is about $34 ($23/acre less than the conventional farm), translating to over $22,000 in avoided cost shock on a 1,000-acre regenerative farm
- A regenerative farm’s post-war input cost is still below what a conventional farm was paying before the war started
The case for regenerative agriculture is often framed around long term outcomes like soil health and carbon sequestration, but the more immediate point is simpler: reduced input dependency is a financial hedge in a world that keeps delivering supply shocks. That’s not a theoretical benefit anymore, but rather a tangible advantage showing up on P&Ls right now. Learn more about our approach to regenerative management at agriculturecapital.com.
Axios. (2026, March 26). How the Iran war could fuel inflation—and accelerate AI adoption. https://www.axios.com/2026/03/26/iran-war-inflation-ai
CNN. (2026, March 23). Fertilizer prices jump as Iran war rattles global supply chains, squeezing farmers. https://www.cnn.com/2026/03/23/business/fertilizer-prices-iran-war-farmers
Cornell University. (n.d.). Fertilizer costs surge as Iran war ripples through farm economy. Cornell Newsroom. https://news.cornell.edu/media-relations/tip-sheets/fertilizer-costs-surge-iran-war-ripples-through-farm-economy
Economic Research Service (ERS), USDA. (n.d.). Chart of Note: Agricultural market conditions (Chart ID: 111221). https://www.ers.usda.gov/data-products/charts-of-note/chart-detail?chartId=111221
Economic Research Service (ERS), USDA. (n.d.). Food Price Outlook: Summary findings. https://ers.usda.gov/data-products/food-price-outlook/summary-findings
Investigate Midwest. (2025, August 25). Tariff escalations trigger another decline in U.S. farm exports to China. https://investigatemidwest.org/2025/08/25/tariff-escalations-trigger-another-decline-in-us-farm-exports-to-china/
Jamestown Foundation. (n.d.). PRC fertilizer export controls provoke de‑risking abroad. https://jamestown.org/prc-fertilizer-export-controls-provoke-derisking-abroad/
National Corn Growers Association (NCGA). (2026, January). Economic outlook: 2026 Q1. https://ncga.com/stay-informed/media/the-corn-economy/article/2026/01/economic-outlook-2026-q1
NPR. (2026, March 20). How the Iran war threatens the global food supply. https://www.npr.org/2026/03/20/nx-s1-5750812/how-the-iran-war-threatens-global-food-supply
Our Valley Voice. (2026, March 19). Iran war strands California farm exports. https://www.ourvalleyvoice.com/2026/03/19/iran-war-strands-california-farm-exports/
PotatoPro. (2026). China restricts fertilizer exports, tightening global supply amid market disruptions. https://www.potatopro.com/news/2026/china-restricts-fertilizer-exports-tightening-global-supply-amid-market-disruptions
Regenerate Outcomes. (n.d.). Analysis shows regenerative agriculture cuts costs and grows profits. https://www.regenerateoutcomes.co.uk/insights/analysis-shows-regenerative-agriculture-cuts-costs-and-grows-profits