Not just oil: Food and agricultural prices rise amid Iran war

Prices of agricultural products and food are rising amid the ongoing war in Iran, driven by a combination of higher shipping costs and a global fertilizer shortage. The shortage has been exacerbated by damage to facilities and infrastructure in the United Arab Emirates caused by Iranian missile and drone attacks.

In Israel, fertilizer prices have surged by 180%, according to Ynet, significantly increasing production costs, as fertilizers account for roughly 10% of total agricultural expenses. At the same time, rising oil prices are pushing up the cost of plastics, with packaging manufacturers warning Israeli food companies of price increases of up to 35%.

Danny Siso, chairman of SHEFFA by Deshen Hatzafon in Beit She’an, an Israeli company that produces and markets fertilizers, revealed that “there is enormous complexity in imports and in maritime shipping, which has become more expensive. In terms of inventory, we are stocked for the coming month, but if we fail to bring in additional shipments, a shortage could develop as early as May.”

Golan Argaman, CEO of Deshen Hatzafon, warned that the volatility is more serious than during the pandemic or the war in Ukraine. 

“Infrastructure in the Gulf region has been damaged, and it will take time to rebuild. This is the first time since World War II that factories have been hit on this scale. It is a dramatic event, occurring just as Israel enters peak planting and fertilization season between April and October,” Argaman said.

However, he expressed cautious optimism despite the challenges amid the Iran war. 

“The fortunate thing is that Israel has secured alternative supply sources from Eastern Europe, Egypt and the Balkans. In addition, some fertilizers are produced locally from domestic raw materials, such as potash from the Dead Sea Works and potassium nitrate from Haifa Chemicals, but for other components we are entirely dependent on imports.”

Fatih Birol, who heads the International Energy Agency (IEA), warned on Monday that some 40 energy facilities had been damaged across the Middle East due to the Iran war, where the ayatollah regime in Tehran has deliberately targeted civilian infrastructure across the region. 

“The situation is very serious,” Birol assessed. “It will take time to return to the normal conditions that existed before the war,” he predicted. 

“As of now, we are losing 11 million barrels per day — more than the two largest oil crises combined," he stressed. "The crisis is also affecting the natural gas market on an unprecedented scale,” Birol added.

The volatile oil price dropped below $100 a barrel on Monday after U.S. President Donald Trump’s public statement that the United States and the Islamic Republic of Iran were allegedly negotiating to end the war in the Middle East. 

“They want very much to make a deal. We’d like to make a deal too,” Trump stated on Monday. “They called. I didn’t call. They want to make a deal, and we are very willing to make a deal,” the president added without elaborating. 

However, Israeli officials have expressed skepticism concerning the prospects of a viable agreement that would address American, Israeli and Middle Eastern security concerns.