Fertilizer prices spike, pushing up grocery bills this year
A Persian Gulf shipping closure has sent costs soaring for farmers. Consumers will feel it in bakery aisles, cooking oils, and meat counters.
Between a shipping chokepoint in the Persian Gulf and your grocery cart sits a growing cost crisis. The Strait of Hormuz closure has sent fertilizer prices into the stratosphere, and farmers — especially those growing canola, wheat, and corn — are absorbing the shock. That cost will trickle down to Canadian consumers later this year and into 2027.
Andre Harpe, a canola farmer in Peace River, Alberta, locked in his fertilizer supply in early January at $500 to $700 per ton. Had he waited, the same order would have cost over $1,300 per ton — a difference of more than $100,000. Farmers who didn't pre-purchase are facing tens to hundreds of thousands in extra costs.
The culprit is natural gas. Breaking nitrogen's triple bond — the process required to create usable nitrogen fertilizer — demands enormous heat, pressure, and energy. "Both directly and indirectly, energy prices and fertilizer prices are facing a major chokepoint in international markets," explained Dr. Evan Fraser, executive director of the Arrell Food Institute at University of Guelph.
Experts anticipate if disruptions persist through late 2026, agricultural production could suffer across two full crop cycles. High fertilizer costs are expected to reduce input-heavy crop yields while driving a surge in Canadian wheat production to meet global shortages.
Canadian consumers should brace for significantly higher grocery bills for bakery staples, cooking oils, meat, and dairy as domestic prices align with rising global commodity markets. The full impact depends on how long the Strait of Hormuz remains disrupted.