What Happened
Conflicts in the Middle East are reverberating through global agricultural markets, with one of the clearest knock-on effects seen in fertilizer supply and prices. Tensions that raise oil and gas prices, threaten shipping routes, or disrupt petrochemical production can quickly push up the cost of key agricultural inputs.
How fertilizer markets are affected
Fertilizer production — particularly nitrogen fertilizers such as ammonia and urea — is highly dependent on natural gas. The industry often uses gas for 70–80% of production costs for ammonia, the feedstock for many nitrogen fertilizers. When energy prices rise, fertilizer production becomes significantly more expensive almost immediately.
Several countries in the Gulf region operate large petrochemical complexes that export ammonia, urea and other inputs for fertilizer manufacture; Iran is also a notable urea exporter. In addition, much of the world’s fertilizer trade moves through maritime chokepoints near areas of tension — including the Strait of Hormuz, the Red Sea and the Suez Canal. Deterioration in maritime security raises insurance and transit costs, forces route changes and lengthens delivery times, all of which add to the final price farmers pay.
Regional impacts for the Americas
Latin America is a major food-producing region but relies heavily on imported fertilizers. For example, Brazil imports roughly 80–85% of the fertilizers it uses, while Argentina’s imports account for about 60% of domestic consumption. Other countries in the region, such as Chile, Peru and Colombia, have even higher external dependence. The World Bank reported a 6.5% month-on-month rise in fertilizer prices in February 2026 amid existing production constraints and higher energy and logistics costs.
When fertilizer prices climb, farmers often reduce applications or change planting plans, which can lead to lower yields, reduced cultivated area and, over time, declines in soil fertility. These shifts exert upward pressure on global food prices, affecting consumers across the Americas.
What this means for Panama
Panama is part of the region that could feel these dynamics through higher input costs and more expensive food imports. The Inter-American Institute for Cooperation on Agriculture (IICA) highlights the vulnerability of small and family farms in Latin America and the Caribbean — roughly 80% of agricultural holdings in the region — many of which would be particularly exposed to sharp fertilizer price increases. Higher costs could strain rural livelihoods and local food availability.
What can be done
Experts and regional bodies recommend measures to manage the risk: protect small farmers, establish shared procurement and storage mechanisms, diversify supply sources and rebuild local industrial capacity where feasible. Longer-term strategies include improving nutrient-use efficiency, promoting biofertilizers and bioinputs, and adopting precision and biotechnological tools to raise productivity while reducing dependence on imports. International agencies such as the IEA and IICA warn that without coordinated responses the effects could extend beyond economics to social and territorial stability.