The Strait of Hormuz threatens global agricultural supplies

The Strait of Hormuz plays a central role in the trade of natural gas and nitrogen fertilizers. A prolonged disruption of this sea route could severely upset agricultural supply chains and reignite tensions in global food markets.

The military escalation in Iran has turned the Strait of Hormuz into a major flashpoint for the global economy. While markets initially focused on the oil shock, the consequences for agricultural supply chains could prove just as decisive.

The fatal correlation

This strategic sea lane, via which nearly 20% of global liquefied natural gas (LNG) trade passes, plays a key role in the fertilizer industry. Natural gas represents about 80% of the production cost of ammonia, an essential feedstock for manufacturing nitrogen fertilizers.

According to Argus Media, nearly 40% of global seaborne trade in nitrogen fertilizers passes through the Strait of Hormuz. A prolonged disruption of this passage could increase not only prices, but also create a physical shortfall in supply.

In this scenario, global agricultural output could be affected. A lack of essential inputs, such as urea or ammonia, could weigh on cereal yields in upcoming harvests, worsening tensions already seen in agricultural markets for several years. According to some analysts, cereal yields could fall by 30% to 50% at the next harvest, triggering panic in the futures markets.

A French agricultural model with limited resilience

The current crisis comes as France's agricultural sector is already going through a period of intense economic and health-related strain. Beyond rising production costs and the farm protests seen in recent years, livestock farmers must also contend with health risks such as lumpy skin disease (LSD) affecting cattle in several regions. This accumulation of crises further weakens a sector in which margins are already under pressure.

Despite lessons learned during the Covid crisis in 2020 and the conflict in Ukraine in 2022, France's agricultural model shows little resilience to major geopolitical shocks.

France remains dependent on imports for certain agricultural and industrial inputs, notably fertilizers, but also some raw materials used in crop-protection products or packaging. This dependence highlights the limits of European policies aimed at strengthening agricultural and industrial sovereignty.

Meanwhile, the rise in the price of non-road diesel (GNR), directly linked to the surge in energy prices, is weighing on farm operating costs. In a context shaped by several years of high volatility in agricultural prices, many farmers' financial capacity remains limited.

As Europe's leading agricultural power, France thus presents a paradox: its highly mechanized, intensive production model makes it particularly sensitive to swings in global energy markets.

The direct impact on markets

For financial players and agri-food companies, the current situation is reshaping risk-management strategies.

Institutions specializing in agricultural finance, such as Crédit Agricole or BPCE, could face higher credit risk if rising production costs undermine the profitability of the most heavily indebted farms. Logistics disruptions are also affecting certain industrial raw materials, notably aluminium used in food packaging. Higher transport and packaging costs could reduce the export competitiveness of some French agricultural products.

In agricultural futures markets, notably Euronext, volatility is hence intensifying. Agri-food companies are struggling to set purchase prices in an environment marked by high uncertainty over input and energy costs.

In this context, analysts are anticipating the risk of a fresh inflationary push in food products in the coming months, with potential effects on consumer prices as early as the summer of 2026.