Strait of Hormuz closure disrupts India’s fertiliser supply ahead of sowing season

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India says it has enough fertiliser. Early signs from the ground tell a different story.

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Speaking in Parliament, Prime Minister Narendra Modi pointed to rising domestic capacity and comfortable stock levels, saying the commissioning of six new urea plants has added more than 7.6 million tonnes to annual output. Production of other fertilisers has also increased, he said.

That buffer is now being tested by disruptions far beyond India’s borders.

The Strait of Hormuz, a narrow shipping corridor in the Gulf, carries roughly a fifth of the world’s oil and about 20 per cent of its liquefied natural gas. Much of that supply comes from Gulf producers that are also central to the global fertiliser trade.

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Natural gas is the key input used to produce ammonia and urea, the nitrogen-based fertilisers that underpin modern agriculture. When gas flows tighten, fertiliser output follows.

International agencies have begun to flag the broader risk. The United Nations World Food Programme has warned that prolonged disruptions to energy and fertiliser supplies could push tens of millions more people into acute hunger this year, while the Food and Agriculture Organisation has cautioned that fertiliser shortages could weigh on crop yields and tighten food supplies.

The effects are already visible in India’s fertiliser sector.

Growing strain

Several urea plants have cut output after disruptions to LNG supplies triggered force majeure declarations by upstream suppliers, according to industry officials. Petronet LNG Ltd, operator of India’s largest liquefied natural gas terminal, has invoked force majeure after suppliers flagged their inability to deliver contracted cargoes.

State-run gas distributors  like GAIL (India) Ltd, Indian Oil Corporation and Bharat Petroleum Corporation have also reduced supplies to fertiliser plants under long-term contracts.

Gas availability has dropped to about 60–65 per cent of normal levels, with some plants operating below 50 per cent, a senior industry official said. Urea output at affected units has fallen by roughly half.

For plants designed to run continuously, this is a major disruption. Ammonia-urea complexes operate best at steady loads, and erratic gas supply forces them into inefficient operation.

“Plants of this scale are not designed to ramp up and down,” a plant operations manager said. “You end up using more energy to produce less fertiliser.”

Operators also describe receiving revised gas allocation instructions late at night, forcing abrupt changes to production schedules and adding to operational risk.

The strain is beginning to show up beyond factories.

In Muzaffarnagar, one of northern India’s key agricultural districts, Bharitya Kisan Union  (BKU) leader Dharmendra Malik said the effects are already being felt.

“Plants are either shutting down or running well below capacity,” he said. “Pesticide prices have gone up by around 30 per cent. Costs are rising from all sides.”

Retailers report uneven supplies ahead of the next sowing cycle.

A fertiliser dealer in western Uttar Pradesh, who did not wish to be named, said the situation was worsening.

“There will be a shortage of DAP during rice sowing,” he said. “Urea will also be in short supply because production depends heavily on gas. If this continues, farmers will face problems and prices will go up.”

The pressure is spreading across farm inputs.

CropLife India, which represents major crop protection companies, said disruptions in supply chains and shipping routes could raise pesticide input costs by 20 to 25 per cent.

“The disruptions may lead to shortages of certain crop protection products during a critical agriculture season, impacting yield and quality,” its chairman Ankur Aggarwal said in a statement.

He also warned that supply gaps could lead to the circulation of counterfeit or substandard products.

Procurement and logistics

Industry experts say the challenge now extends beyond supply cuts to procurement and logistics.

At an international maritime conference in Dehradun, India, last week, shipping executives warned that the impact of the Middle East conflict on fertiliser supply was being underestimated.

Shabu Oriparambil, managing director of UAE-based Transbulk International Shipping, who joined the conference from Dubai via video link, told Khaleej Times that the focus on oil and gas risks had overshadowed a deeper issue.

“Much of India’s fertiliser comes from the Gulf. With the sowing season approaching, procurement itself is becoming a challenge,” he said.

Shabu, who transports bulk fertilisers including phosphates, described the situation as the most challenging the sector has faced in years.

“Sourcing from the Baltic or Black Sea is possible, but transit times are longer and freight costs are significantly higher. It becomes a multi-dimensional problem, and the cost is eventually passed down.”

Freight costs have surged sharply. Industry estimates show war-risk insurance for a single bulk carrier rising from about Dh25,000 to nearly Dh1 million since tensions escalated.

“There are alternatives being analysed, but they are not sufficient,” he said. “If this continues, it will start affecting food security.”

He added that with the kharif season approaching in June, delays in securing alternative supply routes could tighten availability further.

Urea stocks stood at 6.1 million tonnes as of March 19, higher than 5.5 million tonnes a year earlier, according to official data. Industry experts said these reserves are designed to absorb short disruptions, not prolonged stress.

Arvind Shukla of Gaon Connection, a rural media platform that reports on agriculture and village economies, said the current stock position should not lead to complacency.

“India is the world’s second-largest consumer of urea, with annual consumption exceeding 35 million metric tonnes,” he said. “It remains the most widely used fertiliser because of its affordability and government price controls.”

“If the disruption continues, stocks will be drawn down quickly. They will be needed again for the next crop cycle.”

India’s kharif season, beginning around June, depends heavily on timely fertiliser availability for crops such as paddy and maize, both of which require significant nitrogen inputs.

Farmers typically plan purchases weeks in advance. Uncertainty over availability or pricing can delay decisions or push them towards lower-input crops, said Malik.

Stretch reaches the last mile

In Barabanki district in northern India, wheat farmer Brajesh Maurya said the uncertainty was already shaping expectations.

“If fertiliser becomes scarce, the crop will suffer,” he said. “Without nutrients, yields fall, and when production falls, it affects everything.”

He said alternative arrangements would be needed if disruptions persist.

In a March 15 communication, GAIL informed fertiliser companies that LNG supplies would be billed across multiple benchmarks, with retrospective adjustments possible, adding to uncertainty for producers already operating under constrained supply.

If disruptions persist, experts fear the impact will move from supply chains into fields and then into the cost of food.