An energy shock can reach a farm through a sequence of chemical, industrial, trade, and purchasing decisions. Reports from the IEA, USDA, and FAO describe the links in that sequence. Industrial ammonia ties nitrogen fertilizer to fossil energy, while fertilizer production and exports are concentrated. The exposure is consequential without being mechanical: an energy-price change must alter production costs or output, then fertilizer availability or affordability, then farm use before it can create crop-output risk.
From air and energy to fertilizer
Plants need nutrients to grow and develop. Nitrogen helps plants reach their yield potential, phosphorus supports root development and drought resistance, and potassium aids photosynthesis. Some soils naturally contain enough nutrients to support crop growth; others may require fertilizer application to optimize plant health and yield.
Ammonia is the industrial bridge between atmospheric nitrogen and mineral nitrogen fertilizer. Ammonia is the starting point for all mineral nitrogen fertilizers, and about 70 percent of ammonia is used for fertilizers. Common nitrogen products in this chain include urea, ammonium nitrate, ammonium sulphate, and other compounds.
Conventional ammonia production usually obtains hydrogen through natural-gas steam reforming or coal gasification. The Haber-Bosch process then combines that hydrogen with atmospheric nitrogen under high pressure and temperature to make ammonia. In its 2021 roadmap, the IEA reported that just over 70 percent of global ammonia production used natural gas-based steam reforming, while most of the remainder used coal gasification.
The same 2021 roadmap estimated that ammonia production consumed around 2 percent of global final energy, or 8.6 exajoules. Around 40 percent of this energy input was consumed as feedstock, while the remainder supplied process energy, mainly heat. The industry used 170 billion cubic metres of natural gas, equal to 20 percent of industrial natural gas demand, along with 75 million tonnes of coal equivalent.
Where an energy shock enters
The reports document episodes in which higher energy costs reduced fertilizer production or increased nitrogen prices. In mid-2021, a surge in European natural gas prices resulted in reduced ammonia production. Higher coal prices in China also led to electricity rationing and lower output at some fertilizer plants.
European natural gas prices were less volatile in early 2025 than during the spikes of late 2021 and 2022, but the benchmark price still averaged EUR 43 per megawatt hour from January through May 2025. That was 54 percent above the same period in 2024. FAO linked a concurrent rally in urea and nitrate prices to higher fertilizer production costs. Across nitrogenous fertilizers, prices averaged USD 339 per tonne during those five months, 15 percent above the corresponding 2024 average.
High natural gas costs from February through April 2025 triggered urea production curtailments in Egypt and Iran, the fourth- and sixth-largest producers, which together supply 15 percent of global urea. FAO separately reported that production later returned to standard levels.
Energy exposure differs across fertilizer categories. Natural gas is a key building block for all nitrogen fertilizers and for two widely used phosphate fertilizers: monoammonium phosphate (MAP) and diammonium phosphate (DAP). Potassium fertilizers are not directly linked to natural gas prices. In the first five months of 2025, potassium prices were broadly stable from a year earlier even as nitrogen and phosphate prices increased. FAO's product comparison therefore supports identifying the nutrient and product rather than treating every fertilizer-price movement as the same energy shock.
Production concentration and trade
The IEA reports that the availability of feedstock and process energy helps determine where and how ammonia is produced. USDA's data show that fertilizer production and exports are concentrated. China, Russia, the United States, India, and Canada together produce more than 60 percent of the world's fertilizer nutrients. Ten countries account for 71 percent of nitrogen fertilizer production, while five countries or regions account for more than 60 percent of fertilizer exports.
The degree of trade exposure also changes along the production chain. Ammonia exports equal about 10 percent of total ammonia production, while urea exports equal just under 30 percent of urea production. The IEA's comparison suggests that processed urea provides a larger international transmission channel than raw ammonia.
Maritime Chokepoints follows how disruptions on one part of that trade channel can consume vessel capacity, delay deliveries, and increase transport costs even while cargo continues moving.
The USDA and FAO episodes show government policy changing that channel. In 2021, higher coal prices in China led to electricity rationing and reduced output at some fertilizer plants; China then imposed a fertilizer export quota, particularly on phosphates, through June 2022, citing domestic availability and food security.
In its June 2025 update, FAO reported that limits on Chinese urea and DAP exports were active until June 2025. For the June-to-October outlook period, it expected China to resume urea exports from June through October for a maximum of 2 million tonnes and said a reduction in the customs inspection and export-permit period from 40 to 10 days should facilitate MAP and DAP exports. FAO also reported that uncertainty around changes in trade policy and possible tariffs had resulted in adjustments to buyers' behavior.
Aggregate production totals alone do not describe a buyer's access. Access also depends on product-specific export limits and the prices buyers face. Trade policy sits between factory output and farm affordability.
The farm affordability decision
Farmers consider fertilizer prices alongside the prices at which they expect to sell crops. FAO's fertilizer-crop price ratio tracks the relative evolution of fertilizer and crop prices, indexed to the 2019 annual average. When the ratio rises, fertilizer becomes less affordable relative to the crop, the incentive to apply it declines, and crop yields may be affected.
The ratio's direction can differ from its level. In May 2025, the ratio of urea ammonium nitrate (UAN) to wheat prices in France declined, indicating improved affordability, but closed 45 percent above its 2019 baseline; the U.S. urea-to-maize ratio closed 43 percent above baseline. A falling ratio can therefore improve the immediate purchasing environment while leaving affordability worse than an earlier reference period.
The size of fertilizer in farm budgets gives this comparison practical weight. In USDA's 2022 assessment, fertilizer accounted for nearly one-fifth of U.S. farm cash costs. Its share of operating costs reached 36 percent for corn and 35 percent for wheat. Those figures describe the cost structure reported at that time rather than a universal share for every farm or year, but they show why fertilizer affordability can affect production decisions.
From lower use to food-security risk
The final link requires evidence about fertilizer use and crop response. Nitrogen supports plant growth and yield potential, but soils begin with different nutrient conditions. Lower yields are a possible result of reduced fertilizer application rather than an automatic outcome of every price increase.
USDA reported that countries in sub-Saharan Africa had already reduced fertilizer use because of short supplies, low stocks, and high prices. Application rates there were already very low. USDA warned that further reductions could negatively affect crop yields and threaten food security for vulnerable populations.
Longer-term production changes could alter the first link in the chain. The IEA's 2021 roadmap identified emerging near-zero-emission ammonia routes based on electrolysis, methane pyrolysis, and fossil-based production with carbon capture and storage. At that time, these routes were typically estimated to cost 10 to 100 percent more per tonne than conventional production, depending on energy prices and regional conditions, and most were not yet commercially available at scale. The roadmap also reported that more efficient nitrogen application could ease the burden on new production-technology deployment.
How to trace a shock
The chain can be traced in order:
- Identify the relevant energy input and production region. Natural gas dominates global ammonia production, while coal supplies most of the remainder. For electricity-dependent production routes, grid connection can become an upstream constraint of its own.
- Look for an observed production response, such as higher production costs, plant curtailments, or a later return to standard output. A fuel-price movement by itself does not establish a fertilizer shortage.
- Follow the specific fertilizer product. Nitrogen products carry the strongest direct natural-gas exposure, while potassium follows different market fundamentals.
- Map exporter concentration, quotas, tariffs, and other restrictions between production and the importing market.
- Compare fertilizer prices with expected crop prices to assess relative affordability.
- Look for evidence that purchasing or application changed, then consider the soil, crop, and existing application rate before making a claim about output.
An energy or trade shock creates agricultural-output risk when it changes fertilizer availability or affordability enough to alter farm use. A price spike at the first link alone does not establish a food-security loss at the last.