Granted, if they had the forethought and storage capacity to buy fertilizer in the fall or top up their farm fuel reserves, they’re not taking mortal financial blows right before seeding — but with every new gas field struck, fertilizer plant shuttered or country shutting down fertilizer exports to protect their slice of the global pie, it seems less likely that supply chains will get back to status quo anytime soon.

According to an FCC web post, released in early March and recently cited by our reporter Miranda Leybourne, a 2022 study suggested about half of Prairie farmers have their fertilizer by late March. That’s more than in Eastern Canada (only 10 per cent of Ontario farmers had done the same), but it still leaves a lot of producers potentially eating big bills this spring.

Cycle of uncertainty for farmers

As our executive editor Laura Rance noted a few weeks ago, this kind of chaos has become all too familiar.

COVID-19 threw international supply chains into a blender. Inflation has ballooned far more for farmers than even other Canadians. Manitoba Agriculture staff puts the farm inflation rate in the last five years at up to 50 per cent. Canada picked another fight with China, and canola took the brunt. Then there’s the second era of Donald Trump, whose policies have helped throw more uncertainty and market volatility into the mix than the world has seen in decades.

Farmers have become unfortunately used to waking up one morning to find their market gone or input prices spiking due to events impossible to anticipate and which often have nothing to do with them.

A system can only take so much before people start looking for alternatives. If farmers are shopping for innovations though, they’re going to have to wrestle with the reality that many of those technologies have the word “sustainable” associated with them.

That’s the tone of society; and it’s often the buzzword that attracts either public or private investment enough to get those ag tech concepts over the finish line.

Many farmers resent the “green” mandates being imposed upon them by government and public pressure. The federal goal to reduce fertilizer emissions by 30 per cent under 2020 levels by the end of the decade is a prime example.

Farmers’ were first and foremost worried that it would turn into a hard limit on nitrogen fertilizer use. The federal government has always denied that, saying that it’s going to be more about encouraging efficiencies.

If urea futures are going to start spiking 30 per cent though (as they did within two days of the intensified conflict in Iran), maybe less natural gas derived fertilizer isn’t a bad thing.

A case for self-sufficiency

Most of the farms that I’ve seen who have bought into regenerative or “sustainable” practices have a financial reason, rather than just an ideological one. They want long-term viability and to be able to absorb shocks they’ve observed in the field or have suffered in the bank account.

Such was the case with R&L Acres near Sperling, home to Manitoba’s first on-farm green ammonia plant.

Yes, government and researchers had an environmental interest in the initiative. It uses hydro power and electrolysis to get hydrogen from water, rather than natural gas. Combined with nitrogen from the atmosphere, it becomes on-farm manufactured ammonia.

Researchers have even suggested that green ammonia could one day become an alternate fuel source for machinery.

Farm owner Curtis Hiebert, though, also talked about a desire for self-sufficiency, to decouple from the whims of the fertilizer market and save money, especially when regular ammonia prices were up. The numbers presented in 2024 put final cost of a 500 tonne per year system at $948 per tonne for the farmer.

That may not always offer huge savings, but it will be consistent, and that certainty is also worth something. At the time the system was being installed, the fertilizer market was in turmoil because of Russia’s invasion of Ukraine. Today, there’s a whole new set of world affairs mucking things up.

One plant doesn’t mean green ammonia is about to roll over conventional ways of farming, nor is it clear how much our renewable energy infrastructure would be able to support. Manitoba Hydro has already warned about its looming capacity limits. The up-front cost of the system is also big: an estimated $4.5 million in 2024.

Green ammonia is, though, an example of the kind of farm-focused innovation that could offer legitimate solutions and resiliency in an increasingly uncertain world.

We shouldn’t get so caught on the word “green,” and any complicated feelings that word comes with, that we dismiss the equally real impacts for self-sufficiency, sovereignty, stability and, in the best of cases, cost savings.

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Planting of wheat, canola and other crops is set to gather pace this month across much of Australia and farmers need ample supplies of crop nutrients to support early growth.

The price of urea in Australia was quoted around A$1,350 (C$1,298) per ton this week, up about 60 per cent since the beginning of the U.S.-Israeli war with Iran, analysts said. Australian diesel prices are up 88 per cent over the same period.

“Farmers are trying to reduce fertilizer application and switching planting from nitrogen hungry crops like wheat and canola into feed barley,” said Dennis Voznesenski, an agricultural analyst at Commonwealth Bank of Australia.

“Some are also reducing planted area, but this so far is minimal,” he said.

Australia’s wheat planting could drop by 10 per cent to 12 per cent given the current conditions, from 12.4 million hectares a year ago, an agricultural broker and an analyst said. Cultivation of canola is also likely to decline despite higher returns, they said. Both declined to be named.

Australia is the world’s fourth-largest wheat exporter and No. 2 supplier of canola, selling to importers across Asia, the Middle East and Europe. It also sells crops such as barley, chickpeas and pulses.

Straight of Hormuz is fertilizer choke point

Farmers worldwide are struggling to secure fertilizer supplies as planting season in key countries gets underway, with the Strait of Hormuz, which carries 30 per cent of globally traded fertilizers, severely disrupted by the Iran war.

Bank of America warned that the conflict threatens 65 per cent to 70 per cent of global supplies of urea, a key nitrogen fertilizer, with prices already up 30 per cent to 40 per cent.

U.S. farmers plan to plant less corn and more soybeans in 2026 than last year, the U.S. Department of Agriculture said this week. China has curbed fertilizer exports, while India is tapping alternative sources to boost supplies for summer-sown crops.

Corn, wheat and canola usually require higher application of urea than barley and pulses.

“Australia typically relies on China for urea, but export curbs have limited shipments,” said StoneX analyst Josh Linville.

“Buyers turned to Indonesia, only to face further constraints there and by the time they sought supplies from the Middle East, the war had already started and the Strait of Hormuz had closed.”

Crops need fertilizer at the start of planting as well as in development and pre-maturity stages. Crops planted in April and May are harvested in November and December.

“It is a big issue as the cost of farming has risen sharply in the last one month,” said Tobin Gorey, founder of commodities consultancy Cornucopia in Sydney.

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Fertilizer shortages may lead to lower grain output through delayed or suboptimal nitrogen application and encourage farmers to plant less fertilizer-intensive crops such as soybeans, the report noted.

In the U.S., where farmers import up to 50 per cent of urea fertilizer in some years, spring planting could face challenges as supplies remain around 25 per cent below typical levels, according to The Fertilizer Institute.

WHY IT MATTERS: Nitrogen fertilizer prices have risen around 40 per cent since the onset of the conflict in the Middle East, intensifying financial pressure on farmers

Nitrogen fertilizer, which accounts for roughly 20 per cent of grain production costs, has seen prices rise 40 per cent since the onset of the conflict, Goldman said. A quarter of global nitrogen trade and about 20 per cent of LNG shipments — key for nitrogen production — transit the Strait of Hormuz, which has been effectively blocked since the war in Iran started.

Supply disruptions could tighten availability and increase production costs elsewhere, the bank warned.

“Spare fertilizer production capacity outside the Middle East appears limited,” Goldman added, citing production constraints in Russia, which typically accounts for around 15 per cent of global nitrogen fertilizer exports due to facility attacks and export limits, as well as China’s likely extension of fertilizer export restrictions beyond August.

While U.S. farmers remain relatively insulated for now due to advanced procurement ahead of planting season, disruptions in Europe, Australia and the Southern Hemisphere could bolster demand for U.S. grain exports and raise U.S. grain prices, the bank said.

However, delays to March fertilizer shipments might affect April availability, compounded by the lack of U.S. strategic reserves or quick domestic production scalability.

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Russia, a major fertilizer exporter, lacks the capacity to boost production this year amid a global supply crunch caused by the closure of the Strait of Hormuz, through which 24 per cent of global trade in ammonia, an ingredient of ammonium nitrate, passes.

WHY IT MATTERS: Russia controls up to 40 per cent of the global trade in ammonium nitrate. While Canada’s imports of Russian nitrogen fertilizer halted due to economic sanctions, at least one agriculture group has argued the federal government should lift tariffs in order to ease strain on Canadian farmers.

The Agriculture Ministry said it had stopped all issued licenses for ammonium nitrate exports and will not issue new ones, with the exception of those pertaining to government contracts. Russia produces a quarter of the world’s ammonium nitrate.

“In the context of growing export demand for nitrogen fertilizers, the suspension of their supply abroad will allow the needs of the domestic market to be prioritized during the spring fieldwork season,” the ministry said.

Start of planting season

Ammonium nitrate is extensively used in agriculture at the start of the planting season. Russia has had export caps in place since 2021, while producers have been asked by the government to prioritize supplies to the domestic market over exports.

Russia exports ammonium nitrate to Brazil, India, Peru, Mongolia, Morocco, and Mozambique. It also exported a small quantity of ammonium nitrate to the U.S. in 2024.

Eurochem, Acron and Uralchem are Russia’s leading producers of ammonium nitrate.

Ukrainian drones in February hit the Dorogobuzh plant in Western Russia, Acron’s leading production asset, which makes about 11 per cent of Russia’s ammonium nitrate. The plant is not expected to be fully operational before May.

Ammonium nitrate is also used in the production of explosives.

— Reporting by Gleb Bryanski, Olga Popova and Anastasia Lyrchikova

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The farm lender maintained its prediction that GDP growth would slow to around one per cent.

The effective blockade of the Strait of Hormuz, which has restricted the flow of oil and gas from the region, has pushed commodity prices to multi-year highs, FCC economist Krishen Rangasamy wrote in a March 18 report.

Pros and cons

The jump in prices could spell opportunity for Canada, Rangasamy said.

WHY IT MATTERS: Higher fuel and fertilizer prices for farmers today could be followed by higher borrowing costs in the future if core inflation persists.

“Given its high historical correlation with commodity prices, nominal GDP (which matters for government revenues) is likely to also perk up.”

If commodity prices stay high, the federal government and governments in resource-rich provinces such as Alberta or Newfoundland and Labrador could see higher revenues. That doesn’t mean governments will spend more, Rangasamy said, but there’s potential for a spending-related GDP boost.

However, fertilizer prices are among those surging due to the conflict which is weighing on the ag sector. Higher prices for fuel can also push up inflation and erode consumers’ buying power.

Trade war damages

Last year, Canada’s economy saw the worst performance since the 2020 pandemic recession — growing just 1.7 per cent, Rangasamy wrote. Export volumes fell on an annual basis for the first time in five years.

Government and consumption spending offset weaknesses in housing and business investment. However, based on a slumping household savings rate, consumers also dipped into savings to maintain lifestyles. This means Canadians have little cushion to absorb future shocks.

“With no end in sight to America’s trade war … look for trade and business investment to act as a drag on Canada’s economy again in 2026,” Rangasamy said.

Government and consumption spending may not provide as much of an offset this time. Rangasamy noted the government has telegraphed caution related to public spending. While ambitious public projects are in the works, that spending isn’t expected this year.

Interest rates and the loonie

If commodity prices stay high long enough, businesses may be forced to raise prices which could lead workers to demand higher wages.

“That could potentially trigger a wage-price spiral,” said Rangasamy.

The Bank of Canada could pre-emptively raise interest rates to prevent core inflation from taking off. However, he predicted the bank would stay in “pause mode” for several months.

FCC predicted the Canadian dollar would trade in the 72- to 74-U.S. cent range for most of the year, but acknowledged currency volatility could temporarily take it outside that range.

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Prices in Europe and the Middle East rose by about US$50 per tonne in early March with the first significant spot sale into northwestern Europe trading at $750 per tonne cost and freight for mid-March delivery from North Africa.

“Further gains are widely anticipated on expectations for a prolonged disruption,” Ruth Sharpe, global editor for ammonia with Argus Media, said during a recent webinar.

Prices were already starting to firm in 2026 due to a tightness in supply when war broke out in Iran.

The Middle East accounts for 23 per cent of global ammonia trade, shipping out 4.2 million tonnes of the product in 2025.

WHY IT MATTERS: Spring planting is around the corner for growers in the Northern Hemisphere.

Production from Saudi Arabia, Qatar, Bahrain, the United Arab Emirates and Iran has been cut off from the global market. Oman is the only country in the region capable of near-term shipments.

Three ammonia vessels that were partially or fully loaded at the time hostilities broke out were unable to exit the region. Another six en route had to be diverted.

Production has also been sharply reduced in Trinidad, which is the world’s largest exporter of ammonia.

Nutrien shut down its plants in the country in October 2025 due to a dispute with the government over port access and the lack of reliable natural gas supply.

That reduced Trinidad’s exports by nearly 40 per cent.

Nutrien is negotiating with Trinidad’s government. If the situation is resolved, it could return one million tonnes of supply to the export market.

However, there is another market that could be an even bigger help.

“A meaningful increase in U.S. Gulf exports would be one of the few options capable of offsetting a portion of the (Middle East) shortfall,” said Sharpe.

Gulf Coast Ammonia is commissioning a new facility in Texas City, Texas, while Woodside Energy’s new plant in Beaumont, Texas, is targeting its first exports in April.

Those two new plants will eventually contribute up to two million tonnes per year in exports once production ramps up.

Southeast Asia and China could also add some tonnes on the spot market.

Sharpe said ammonia prices are also being influenced by the European Union’s carbon border adjustment mechanism, which was implemented Jan. 1, 2026.

That is adding about $75 per tonne to the price of imported ammonia in that region due to higher compliance and carbon costs.

It is also leading to delayed purchases because there is considerable uncertainty surrounding implementation details of the program. EU member states are hoping to sort out those details by July.

Sharpe said the current situation is reminiscent of 2022, when ammonia prices shot up above $1,600 per ton due to sanctions removing Russian supplies from the market following its invasion of Ukraine.

That took about the same number of tonnes out of the market.

However, she doesn’t think prices will get anywhere near that high this time because of the new U.S. supplies coming online.

India will be the market most affected by the Middle East shortfall. It purchases about two million tonnes per year from the region.

“Market concerns are growing over possible shortages ahead of the kharif season, should the blockade extend into June,” she said.

South Korea, Morocco, Turkey and South Africa are other big buyers of Middle East ammonia.

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“Which is not sustainable,” the organization said in a statement to Glacier FarmMedia. 

“Access to additional credit does not address the underlying issue.”

FCC announced it would extend its Trade Disruption Customer Support Program, originally established in early 2025 in response to tariffs. Agriculture and food borrowers will be able to receive a new or additional credit line of up to $500,000 to modify terms and to defer principal payments on existing loans.

FCC will now also provide support to help producers and agribusinesses “manage financial pressures caused by unexpected market shocks,” Friday’s statement said.

Middle east conflict spikes input prices

Fertilizer prices have soared since the Iran war began at the end of February and led to the closure of the Strait of Hormuz to most shipping, disrupting urea and sulphur supplies from the Gulf.

As a result, farmers around the world are struggling with fertilizer costs as the northern hemisphere spring planting season approaches.

“I would be faced with financial stress and I would have to maybe not buy as much fertilizer, or I would not plant what I was supposed to plant,” said FCC chief economist J.P. Gervais. “The liquidity in the credit is to actually, hopefully help businesses not having to deviate from what they believe is in their best interest long-term.”

Looking for immediate action

Grain Growers of Canada argues that the federal government should reduce farmers’ costs by dropping fertilizer tariffs.

Canada placed 35 per cent tariffs on Russian fertilizer levied in response to Russia’s war against Ukraine. That tariff stopped imports of Russian urea, which had previously made up more than 63 per cent of Canadian imports according to a 2025 report from Grain Farmers of Ontario.

“Canada should also explore targeted, temporary support tied to fertilizer affordability, activated during periods of extreme price volatility, to provide a short-term safety net for farmers while longer-term solutions are implemented,” Grain Growers of Canada said.

-With files from Reuters

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China is among the largest fertilizer exporters – shipping more than $13 billion (C$17.8 billion) worth of it last year – and it has a history of controlling exports to keep prices low for farmers.

Shipments through the war-blocked Strait of Hormuz account for roughly one-third of the sea-borne supply. In mid-March, Beijing banned exports of nitrogen-potassium fertilizer blends and certain phosphate varieties, sources told Reuters.

WHY IT MATTERS: International urea prices have risen by around 40 per cent from pre-war levels as the closure of the Strait of Hormuz blocks roughly one third of the supply and contributes to higher production costs.

The ban, which has not been formally unveiled, was reported earlier this week by Bloomberg News.

Added to existing bans and export quotas for urea, only a handful of fertilizers – notably ammonium sulphate – can be exported, five sources said. That would mean between half and three quarters of China’s exports last year are restricted, potentially up to 40 million metric tons, according to a Reuters estimate.

“This pattern is consistent: China restricts supplies rather than coming to the rescue during global tightness,” said Matthew Biggin, a senior commodities analyst at BMI.

“The export restrictions exist because of their tight domestic balance – they’re prioritising food security and insulating their domestic market from price shocks.”

Beijing’s curbs, like its move last week to ban refined fuel exports, come as governments limit exports of products whose inputs have been threatened by disruption from the war, worsening shortages and higher prices around the world.

International urea prices have risen by around 40 per cent from pre-war levels. In China, urea futures are near a 10-month high.

Dependent on China

Last year, China sent Brazil, Indonesia and Thailand roughly a fifth of their fertilizer imports and that figure stood at a third for Malaysia and New Zealand, according to International Trade Centre data. For India, it was around 16 per cent, according to its trade data.

Between half and 80 per cent of those exports are now restricted, according to a Reuters analysis of Chinese customs data.

“Buyers were hoping China would step in and fill the supply gap, but this decision will only tighten supplies further,” a New Delhi-based fertilizer company official said, in reference to the recent restrictions.

The company official declined to be named due to the sensitivity of the matter.

India, which imported more than 40 per cent of its urea, a nitrogen-based fertilizer, and DAP, a blend, from the Middle East last year, has requested China issue export quotas for urea.

When will exports resume?

The Philippines on Wednesday said China had assured it that fertilizer exports would not be restricted.

Asked about the comments a day later, China’s Ministry of Foreign Affairs spokesperson referred the question to other departments.

China’s General Administration of Customs, National Development and Reform Commission and Ministry of Commerce did not immediately respond to requests for comment.

At a fertilizer conference in Shanghai attended by Reuters on Wednesday, five salespeople said they did not expect the fertilizer bans to be lifted before August, after China’s peak June-to-August export period.

Producers are watching for signals from the government after spring planting to see whether bans would be extended.

In December, the state-linked fertilizer association urged major producers to suspend exports of phosphate fertilizers until August.

“Most folks who follow this very, very closely are expecting them to continue to extend the export bans,” said Caitlin Welsh, a director at the Center for Strategic and International Studies.

“China is so reluctant to do anything that would increase the price of grains, especially animal feed, domestically.”

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Canadian Finance Minister François-Philippe Champagne made the announcement March 17.

“Agriculture is without a doubt one of the most important and investable sectors in our economy,” said federal Agriculture Minister Heath MacDonald in a news release.

“The pace of technological advancement we’ve seen across the industry in recent years has been impressive, and investments like this will continue to accelerate innovation.”

The federal cash is part of an $50 million equity commitment alongside Idealist Capital to support the next phase of Solugen’s growth and commercial expansion.

Solugen produces and commercializes Azogen, a fast-release liquid ammoniacal nitrogen fertilizer derived from hog manure.

The investment will allow Solugen to expand capacity at its existing plant in St-Patrice-de-Beaurivage, Que. and construct a second facility in the province.

Solugen was founded in 2017 and is headquartered in Lévis, Que. Its Azogen is produced through a fully circular process. By converting manure into high-performance fertilizer, it reduces greenhouse gas emissions associated with conventional fertilizers, the news release said.

The funding comes through the Canada Growth Fund, a $15 billion, arm’s length public investment vehicle launched by the federal government to attract private capital and invest in Canadian projects and businesses.

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Some 20 per cent of the world’s oil and liquefied natural gas also transits the Strait, and its near closure, combined with missile and drone strikes across the Gulf, have forced regional energy facilities to halt output.

That has, in turn, shut fertilizer plants in the Gulf and beyond, just as farmers across the Northern Hemisphere prepare for spring planting, leaving little margin for delays.

The global market for urea was already struggling with tight supplies prior to the current conflict, with Europe forced to cut output due to the loss of cheap Russian gas and China restricting fertilizer exports, including urea, in order to ensure domestic supplies.

Which fertilizer plants have halted or cut output?

Qatar Energy has halted output at the world’s largest urea plant after shutting down gas output following attacks on its LNG facilities.

In India, a massive global urea market, three urea plants have cut output as LNG supplies from Qatar have plummeted.

India, home to nearly a fifth of the world’s population, buys more than 40 per cent of its urea and phosphatic fertilizers from the Middle East, and recently agreed to buy 1.3 million tons of urea, some of which might not arrive on time.

Bangladesh has shut four of its five fertilizer factories, while Australia’s Wesfarmers has warned of possible shipment delays, including for urea.

Egypt, which supplies eight per cent of globally traded urea, could struggle to produce nitrogen fertilizer after Israel declared force majeure on gas exports to the country, Scotiabank and Rabobank analysts say.

Brazil is almost 100 per cent reliant on urea imports — nearly half of which transits the Strait of Hormuz.

In the U.S., farmers are reporting sold out retailers, with the country about 25 per cent short of fertilizer supplies for this time of year.

Globally, urea exports are set to fall to about 1.5 million metric tons in March, compared to 3.5 million without China’s supplies, or 4.5 to 5 million with China, according to Scotiabank.

How has the conflict affected prices?

Urea export prices in the Middle East have jumped about 40 per cent to just above $700 per metric ton (C$958) on March 13 from just under $500 (C$685) before the war, according to Argus.

In the U.S., fertilizer prices have surged as much as 32 per cent since the conflict began.

Analysts say prices for nitrogen-based fertilizers like urea could roughly double if the war drags on.

Given the Middle East’s dominant market share, no producer can quickly make up for the lost supply, according to Chris Lawson, analyst at CRU.

Russia, the world’s largest fertilizer exporter, is facing supply disruptions due to Ukraine drone strikes, while China, despite ample capacity, is restricting exports, he said.

— Additional reporting by Gus Trompiz, Sybille de La Hamaide and Dewi Kurniawati

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