When global prices rise, the impact reaches local markets in two weeks to a month
Urea prices jumped over US$100 per ton in two weeks, reaching US$590/ton, driven by oil and gas costs plus logistics risks in the Strait of Hormuz. Peru imports 43% of fertilizers as urea, with 40% from Russia, 20% from China, and 15% from US—making the nation highly vulnerable to global supply shocks.
- Urea prices jumped over $100 per ton in two weeks, reaching $590/ton
- Peru imports 900,000 tons of fertilizer annually; 43% is urea
- 40% of Peru's fertilizer comes from Russia, 20% from China, 15% from US
- Fertilizer represents 12-27% of production costs for family farmers
- In 2022, a 50-kg bag of urea rose from 70 soles to 360 soles
Middle East tensions push fertilizer prices up 20%, threatening Peru's agriculture sector which imports 900,000 tons annually. Experts warn prolonged conflict could trigger food price increases similar to 2022's crisis.
Peru's farmers are watching the Middle East with the same nervous attention they once reserved for the war in Ukraine. The country imports roughly 900,000 tons of fertilizer annually—nearly all of it from abroad—and in recent weeks, prices have begun their climb. Urea, the nitrogen-rich compound that accounts for 43 percent of all fertilizer use in Peru, has jumped more than 20 percent in just a few weeks, reaching around $590 per ton. That's an increase of more than $100 in approximately two weeks, driven by rising oil and natural gas costs and the growing risk of disruption along the Strait of Hormuz, one of the world's most critical shipping routes.
The memory of 2022 still weighs on the sector. When Russia invaded Ukraine, fertilizer prices tripled, and the government was forced to step in with emergency aid to keep farmers from abandoning their fields. Gabriel Amaro, who leads Peru's agricultural producers association, is careful to distinguish between then and now. The current situation is serious but not yet catastrophic. There is upward pressure and volatility, he says, but not the kind of global fertilizer crisis that followed the Russian invasion. Still, the trajectory is concerning. Shipping costs have already risen about 10 percent, and that increase flows directly into the price of fertilizers arriving at Peruvian ports. Potassium nitrate has climbed roughly 21 percent, potassium sulfate about 10 percent, and ammonium hydrate around 6 percent—averaging increases near 10 percent across the board.
Peru's vulnerability runs deep. More than 40 percent of its fertilizer imports come from Russia, over 20 percent from China, and about 15 percent from the United States. The country has little room to maneuver when global supply tightens. When international prices rise, the impact reaches local markets with striking speed—typically within two weeks to a month, depending on existing inventory levels. Crops that depend most heavily on fertilizer—rice, corn, potatoes, and many export-oriented fruits and vegetables—will feel the pressure first. Marco Vinelli, who teaches agricultural business at ESAN, explains the tight coupling between fertilizers and energy. Most of these inputs depend directly or indirectly on petroleum. When oil prices climb, so do production costs, transportation costs, and logistics costs across the entire chain.
The threat to family farmers looms largest. For small-scale producers, fertilizer represents between 12 and 27 percent of total production costs. Luis Cruz Cuadros, who leads Peru's national agricultural convention, remembers 2022 vividly. A 50-kilogram bag of urea that once cost 70 soles suddenly cost 360 soles. The government responded with a fertilizer subsidy program, but the damage to rural livelihoods was already done. If prices remain elevated for months, that cost will eventually reach the dinner table. Food prices for staple crops will rise, hitting low-income consumers hardest.
For now, specialists believe the most likely scenario is a temporary shock tied to energy markets. If the Middle East conflict stabilizes and oil prices moderate, pressure on fertilizer costs could ease. But the risk calculus changes if geopolitical tensions persist or if critical energy trade routes are disrupted. If that happens, agricultural costs could climb for multiple growing seasons. Meanwhile, the export-oriented farming sector is already taking precautions—locking in supply contracts, diversifying suppliers, and finding ways to use fertilizer more efficiently. The question hanging over Peru's fields is whether these measures will be enough, or whether the world's instability will once again force farmers to choose between their livelihoods and their land.
Notable Quotes
There is upward pressure and volatility, but not yet a global fertilizer crisis like the one after the Russian invasion of Ukraine— Gabriel Amaro, president of Peru's agricultural producers association
When fertilizer prices rise, those increases can reach the local market within two weeks to a month, depending on available inventory— Marco Vinelli, director of agricultural business program at ESAN
The Hearth Conversation Another angle on the story
Why does Peru feel this so acutely? Other countries import fertilizer too.
Because Peru imports almost everything. We don't produce fertilizer domestically. When global prices move, there's nowhere to hide—the shock hits us directly and fast.
The 2022 crisis seems to haunt this story. What made it so severe?
Urea tripled in price. A farmer's single biggest input cost suddenly became three times as expensive. The government had to subsidize it just to keep people farming. That memory is why people are paying attention now.
But you said this isn't that crisis yet. What's the difference?
Scale and duration. In 2022, Russia and Ukraine were major fertilizer producers, and the war cut off supply entirely. Now we have pressure from energy costs and shipping, but supply chains are still moving. The real danger is if this drags on for months.
Who gets hurt first if prices stay high?
Family farmers. For them, fertilizer isn't 5 percent of costs—it's 12 to 27 percent. When that doubles, they can't absorb it. They either stop farming or go into debt. And then food prices rise for everyone else.
Can Peru do anything to protect itself?
Not much, structurally. We could invest in domestic fertilizer production, but that takes years. Right now, the export sector is trying to lock in contracts and use fertilizer more efficiently. But a small farmer can't do that. They just wait and hope.
So this is really about global energy prices, not the conflict itself?
The conflict matters because it threatens the Strait of Hormuz—a chokepoint for oil. But yes, fundamentally, it's about oil and gas. Fertilizer is made from them. When energy gets expensive, fertilizer gets expensive. Peru just has nowhere else to turn.