In today’s Finshots, we tell you the story of how a war far away could quietly spike your grocery bill. Not through crude oil, but through something much humbler.

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The Story

It’s June. A farmer in eastern Uttar Pradesh is leaning on his bike outside the local cooperative store. He’s here to pick up urea (the fertiliser). Sowing begins soon, and the monsoon looks promising. But the dealer shrugs.

“No stock yet. Maybe next week.” The farmer sighs because this isn’t the first delay.

Down south, a trucker in Visakhapatnam looks over his delivery list. He’s supposed to transport imported potash from the port. But customs has flagged the container. Shipping costs have gone up. Insurance premiums too. And rumours are swirling about delays at Iran’s Bandar Abbas port.

At first glance, these seem like unrelated hiccups. But if you zoom out, you’ll spot the bigger trigger. Israel has just struck Iran. And with Iran retaliating, both countries are now on the brink of war. And of course, global markets are reacting. Crude oil prices are climbing.

But there’s another, quieter casualty: fertiliser.

That’s the connection few people think about.

You see, the world’s food system runs on three key ingredients: Nitrogen (N), Phosphorus (P) and Potassium (K). Together, they form NPK: the holy trio that feeds our crops. Nitrogen boosts photosynthesis and leaf growth, phosphorus strengthens roots and flowers and potassium improves drought and disease resistance.

Now here’s the thing. To make these fertilisers, you need inputs from nature’s vault and a lot of industrial muscle. Nitrogen fertilisers (like urea and ammonium nitrate) are made by synthesising ammonia. And ammonia is made from natural gas. About 60% of production cost is just gas. Phosphorus fertilisers (like DAP and MAP) come from phosphate rock, which is mined and chemically processed using sulphur. And Potassium fertilisers (like potash) are dug straight from potash ore (large deposits of which exist only in a few countries).

And guess who has plenty of those? Well, countries clustered around the Persian Gulf. Or countries that now sit at the edge of a potential war.

The Middle East and North Africa region (MENA) exports over 30% of the world’s nitrogen fertilisers. Countries such as Iran, Qatar, Oman, Saudi Arabia and Egypt are awash with natural gas, sulphur and ammonia exports. Iran alone sends out over 16 million tonnes of urea each year. 

For phosphate fertilisers, Morocco holds nearly 70% of the world’s phosphate rock reserves. 

And when it comes to potash, the third pillar, Russia and Belarus used to supply nearly 40% of global capacity. But those supply lines have also been disrupted since the Ukraine war.

Which means all three pillars of NPK are geopolitically fragile. So most of what goes into making global fertiliser comes from conflict zones or countries one crisis away from sanctions or shipping bans.

And not to forget fertiliser shocks are sneaky. They don’t show up at your fuel station next week. They hit with a lag of a few months. When urea prices rise, farmers use less. Or sow less. The harvest shrinks. Traders pay more. Food prices go up. And suddenly, your grocery bill gets slightly expensive.

That’s what economists call a second-order effect. And it’s happened before.

In 2008, fertiliser prices shot up as China restricted urea exports and commodity markets rallied. In 2022, the Russia-Ukraine war and sanctions on Belarus, which together accounted for 40% of global potash, sent nitrogen and potash prices through the roof. Global fertiliser prices doubled in months. Sri Lanka saw a farm crisis. Ghana saw protests. Even in India, inflation ticked up quietly.

So yeah, we’re staring at that risk again today.

And the problem is India isn’t self-reliant here. We use over 60 million tonnes of fertilisers every year. But we import nearly 30% of urea, over 90% of phosphates and 100% of potash.

To shield farmers, the Indian government keeps prices artificially low. A 50 kg bag of urea still costs about ₹250, even though global prices might suggest ₹3,000 or more. That gap is plugged by subsidies. But the bill is steep, about ₹1.8 lakh crore in FY25. That’s why our fertiliser spending is budgeted at about 70% of the total agriculture budget. 

So when global prices rise, the government has two choices: absorb the cost and blow up the fiscal deficit, or let prices rise for farmers, which then passes down through food inflation. Either way, someone pays. Eventually, everyone does. And soon, it’s felt everywhere.

So what’s India doing about it?

To its credit, quite a bit.

We’ve signed long-term import deals with Saudi Arabia and Oman for urea, partnered with Morocco’s OCP Group (a state-owned phosphate rock miner) for phosphoric acid, revived dormant urea plants under a ₹70,000 crore plan, and diversified potash imports from Russia and Belarus to Canada and Jordan.

We also launched “One Nation, One Fertilizer” to simplify branding and reduce logistics costs. And most ambitiously, we introduced “nano urea” — a liquid fertiliser developed by IFFCO (Indian Farmers Fertiliser Cooperative) that claims to replace a 45 kg bag of urea with a 500 ml bottle. Over 8 crore bottles have already been produced. We’ve even deployed real-time tracking systems to monitor inventory movement.

But this is still a brittle system. Because while supply chains are being diversified, demand is still distorted.

We still use fertilisers far more indiscriminately than other countries. Urea is overused simply because it’s the most subsidised. The ideal NPK use ratio is 4:2:1. But in many states, it’s as skewed as 10:4:1. Overuse brings diminishing returns and damages soil health.

In the end, fertiliser becomes a budgetary black hole. Every global shock forces India to either borrow more or cut elsewhere. And that’s unsustainable.

So how do we tackle this, you ask?

In the short run, India will likely increase buffer stocks, scout new suppliers and maintain high subsidies.

But in the long run, we need a shift — not just in supply, but in demand reform. Subsidies could be tied to crop needs. States must be nudged to balance usage — like under the PM-PRANAM scheme, which rewards reduced chemical use. Precision farming, soil testing, and even caps on per-acre use can build long-term resilience.

Experts also favour direct cash transfers over price subsidies. That way, farmers get the money directly, can choose nutrients wisely, and avoid distorted demand. China tried this a decade ago and it did boost yields by a margin.

But these are long games. And wars aren’t.

Ships and fertiliser bags are still moving. Prices are just slightly up. But history shows how fast that can change — one blockade, one strike, one clause.

And then it trickles down.

You walk into your neighbourhood kirana store. Pick up atta, oil, rice. And when you reach for a packet of dal, you pause. ₹105. Last month it was ₹85. You sigh. You’ve seen this before. You pay the bill, head home, and forget about it.

That weekend, a headline scrolls past: “Crude oil steady despite Middle East tensions.”

You smile briefly. But then you remember. The oil wasn’t the real story this time. It was also the rejig in fertilisers.

Until then…

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