The war in Ukraine is sending fertilizer prices through the roof. That could spark food shortages in countries already struggling with widespread hunger.

• The war in Ukraine has lifted fertilizer prices, leading to concerns of a global food shortage.
• Many low-income countries were struggling with hunger and pricey fertilizer before the invasion.

In an era of abundant economic worries, the chaos in the world's fertilizer market is one of the most concerning.

The war in Ukraine has boosted already high fertilizer prices. Russia serves as the world's top fertilizer exporter, selling some $7.6 billion worth of fertilizer in 2020, according to data from the French research organization CEPII. Russia's invasion of Ukraine slammed both countries' abilities to trade, and in early March the Russian government called on fertilizer producers to suspend exports entirely.

The new supply pressures have lifted prices at a stunning clip. The Green Markets North America fertilizer-price index — which tracks the costs of urea, potash, and diammonium phosphate — has soared by 42% since the invasion began in late February.

Higher fertilizer prices may not seem worrisome for the average American — potash and urea don't show up on most people's grocery lists. But the prices of food staples like wheat are also soaring, risking hunger crises in low- and middle-income countries. Persistently higher fertilizer costs could turn food inflation into a lasting problem and plunge the world into a new kind of economic turmoil.

"I am deeply concerned that the violent conflict in Ukraine, already a catastrophe for those directly involved, will also be a tragedy for the world's poorest people living in rural areas who cannot absorb the price hikes of staple foods and farming inputs that will result from disruptions to global trade," said Gilbert Houngbo, the president of the UN's International Fund for Agricultural Development.

"We are already seeing price hikes, and this could cause an escalation of hunger and poverty with dire implications for global stability."

Soaring fertilizer prices escalate food-shortage concerns

The world was already short on food before Russia invaded Ukraine in late February. A UN report on food security estimated that between 720 million and 811 million people faced hunger in 2020 — an increase of as many as 161 million from 2019 — as the coronavirus crisis and economic recession hobbled poorer countries.

The Russia-Ukraine conflict has only worsened the problem. Wheat prices have soared by 27% since the invasion began, with markets bracing for supply from both Russia and Ukraine to fade. While advanced economies can absorb higher costs and turn to alternatives, developing countries are stuck with few options aside from footing a larger bill.

Fertilizer prices are also up about 260% from prepandemic levels, having been dented by higher energy costs and new export-licensing mandates imposed by major exporters like Russia and China.

These higher costs are forcing farmers to scale back production or use less fertilizer and risk harvesting smaller yields. Some are clamoring for animal manure to replace commercial nutrients. Even if the Russian invasion were to end soon and food inflation cooled, soaring fertilizer costs would have a delayed effect on the market and leave supply strained well into the future.

Expensive crop nutrients hinder advanced economies' ability to fill the hole in the world's food supply. The US Department of Agriculture said in late March that it expected farmers in the US to plant less corn but a record amount of soybeans in 2022. Soybeans require less commercial fertilizer than corn, and a shift signals that farmers are gearing up for prolonged disruption in the fertilizer market.

The uptick in fertilizer prices could even spark civil unrest in countries with unstable food supplies. Food-price shocks triggered riots in Haiti, Bangladesh, and Mozambique in 2007 and 2008, Insider's Jason Lalljee reported in March. Food scarcity also played a role in the Arab Spring protests of the early 2010s as people struggling with hunger and poverty mobilized against their governments.

Intense damage has already emerged in the world's most vulnerable countries. The UN's World Food Programme said in late February that it had been forced to halve food assistance for 8 million people facing hunger in Yemen. The program's executive director, David Beasley, said the combination of dwindling funds and soaring prices risked pushing millions of Yemenis into famine conditions.

"We have no choice but to take food from the hungry to feed the starving," Beasley said, adding, "This will be hell on earth."

Pricey fertilizer worsens the world's inflation problem

The fertilizer-price surge is also a major obstacle in the fight against inflation. Food prices are a major component of headline inflation measures; the category has a 14% weighting in the consumer price index, for example. If fertilizer prices don't fall back to earth, it could weigh on future crop yields and keep food supply well below US demand.

The price surge also strikes at a weakness in the Federal Reserve's plan to quell price growth. The central bank started raising interest rates in March partly in an effort to ease inflation. Higher borrowing costs help rein in demand for a range of goods, but people need to eat, and the Fed's plan to fight inflation can't do much to close the gap between food supply and demand.

Inflation in other pockets of the economy is worsening the fertilizer problem. Energy prices have soared more than any other major CPI category, leaping by nearly 26% over the past year. Natural gas is one of those surging energy commodities and a crucial component in the production of commercial fertilizers. Rising natural-gas prices have already forced European fertilizer factories to scale back production, threatening an even bigger nutrient shortage in the months ahead.

The world is adjusting somewhat to combat the new price pressures. The USDA announced in March that it would make $250 million available in the summer to boost domestic fertilizer production.

But last-minute adjustments aren't likely to fully counter a fertilizer shortage. The world is already struggling to shoulder rising food costs, and there's little indication that the war in Ukraine will end soon. As farmers make do, elevated fertilizer prices loom over hungry countries and inflation-rattled economies.