Fertilizer disruption risks global food crisis

A prolonged war involving the United States, Israel, and Iran, with no clear end in sight, is unsettling global food markets. As the April planting season begins, supplies of urea and sulfur, essential ingredients for fertilizer, have been disrupted following the closure of the Strait of Hormuz. South Korea, where overall grain self-sufficiency stands at about 20 percent despite rice exceeding 95 percent, is especially vulnerable to rising food costs. If the conflict continues, pressure on food prices in the second half of the year could escalate.

Export prices for Middle Eastern urea climbed 38 percent in March from the previous month and surged 172 percent from a year earlier. Supplies have effectively been cut off as shipments through the Strait of Hormuz remain blocked. South Korea imports about 38 percent of its urea, a key input for nitrogen fertilizer, through the strait. Countries producing feed crops such as corn and soybeans are also under strain. Fertilizer shortages could weaken harvests, driving up global prices for meat, dairy, and processed foods. South Korea faces similar risks, importing about 95 percent of its feed crops. Concerns are also mounting over fishflation, as higher fuel costs reduce fishing activity and lift seafood prices worldwide.

The government says major fertilizer producers have secured enough raw materials and finished goods to last through late July, suggesting that near-term supply disruptions may be limited. However, if instability in the Middle East persists, the outlook could deteriorate. Food manufacturers that rely on imported agricultural, livestock, and seafood inputs are already feeling the strain. Even if they delay price increases for now, mounting cost pressures will be difficult to absorb over time.

The conflict raises the risk of simultaneous increases in agricultural, livestock, and seafood prices, a scenario often described as agflation. Such a convergence would be highly unusual. At a recent meeting in London, where foreign ministers from more than 40 countries gathered to discuss the Strait of Hormuz crisis, food security emerged as a central concern. South Korea’s government should prepare for a worst-case scenario in which supply disruptions and elevated prices persist into next year.

Authorities should begin by reassessing domestic factors already pushing up food costs, including rice prices, which have risen about 20 percent from a year earlier, as well as higher restaurant prices. At the same time, the government should identify gaps that cannot be met through domestic production and consider measures such as tariff incentives to help companies secure supplies in advance from overseas.