In history, rulers often tried to avoid going to war in the spring, for the sowing season, and in the autumn, as the harvest required most of the country’s workforce to be the fields. Messing with the agricultural calendar was a sure recipe for disaster. The war in Iran and its consequences on the availability of resources are reminding us of these historical lessons. Indeed, input prices are exploding, and the consequences could be dire.

1 – Urea prices are skyrocketing (again)

As you can see on the graph below, urea prices have increased significantly since the start of the war in Iran. For many, this is reminiscent of the peaks observed in 2022 when Russia’s invasion of Ukraine started.

As the world’s supply of natural gas is being strangled, we are also discovering a global dependency on the Middle East on Urea, a nitrogen fertiliser key for agriculture (and produced with natural gas). As urea granules are much more convenient to ship than gas, a large share is transformed directly where gas is extracted. And as it is considered a commodity, and not a strategic one like petrol, a tiny amount is being stocked.

2 – Potentially dire consequences

As shown in the graph, fertilisers feed roughly half the world’s population. When sanctions on Russian exports took effect in 2022, fertiliser prices spiked, and those shocks were reflected in food commodity prices.

If the supply is restored shortly, the consequences should be light. However, a long-term reduction in availability, leading many farmers in the Northern hemisphere to reduce their use of fertiliser, could have severe repercussions by the end of the year in the world’s poorest regions.

3 – How can innovation help us reduce our dependency on synthetic fertilisers?

It’s simply not feasible to do without synthetic fertiliser from one day to the next. Reducing their use progressively can be part of the solution, as can decreasing our meat consumption (a large share of crops is used to feed animals), but that’s not really realistic given current trends, which all point in the opposite direction.

Beyond conflicts, fertilisers are already responsible for about a quarter of cropland emissions, and their use is rising fast in developing economies. For any food company looking to decrease its scope 3 emissions, this is the bigger lever to play on alongside animal emissions.

In 2022, as synthetic fertiliser prices skyrocketed, we observed a surge in investor appetite for alternatives as well as the resilient farming ecosystem. Four years later, many of the companies that emerged or got funded at that time have now matured and are ready to scale. The renewed urgency created by the current event could again boost this innovation ecosystem.

Bioinputs are not only about alternatives to synthetic-based fertilisers. The ecosystem has developed significantly and includes tens of startups across categories as diverse as bio-pesticides and soil microbiome solutions (such as Pivot Bio, Indigo, or Aphea Bio), which boost soil health while reducing the need for external sources of nitrogen.

But despite the growing interest, scaling these solutions remains difficult. Most bioinputs still face structural challenges:

• Scale: production remains limited, and scaling microbial solutions is complex.
• Localisation: unlike synthetic fertilisers, biological solutions often need to be adapted to specific crops and geographies (and to match local regulation).
• Cost: fertilisers are still treated as commodities, and agricultural emissions are rarely prioritised in corporate decarbonisation strategies.

For most food companies, fertilisers are considered a distant upstream issue, even if they are a critical part of the supply chain and responsible for a significant share of agricultural emissions and production costs.

This second fertiliser shock in less than five years should be a reminder that inputs are not just a farming issue. Downstream food companies have spent the past decade focusing on ingredients and consumer trends. The next decade may require them to pay much closer attention to farm inputs. Developing an internal understanding of where things stand would be the first stage. Then, supporting localised experimentation would help to gain knowledge and increase their long-term resilience.