War in Iran: pressure on Swiss food industry

Context

In brief

• Middle East conflict blocks Strait of Hormuz
• Fertilizer prices +60%, wheat +6%, rice +9%
• Vetropack: rising energy and transport costs

Key facts

• What: Blockade of the Strait of Hormuz
• When: From April 2026
• Where: Persian Gulf
• Who: FAO, Suissenégoce, Keytrade
• Amount: +60% urea price, +6% US wheat, +9% Thai rice

The conflict in the Persian Gulf and the subsequent blockade of the Strait of Hormuz have slowed down the trade of some essential goods and pushed up energy prices. Switzerland, home to large multinational food companies and important global commodity traders, is beginning to feel the effects. Among the most affected sectors are fertilizer trading and glass bottle production.

Fertilizers: rising prices and supply at risk

Fertilizers are among the most traded commodities in the world: in 2024, international trade in these products reached 169 million tonnes. About half of global production is used in the cultivation of cereals such as rice, wheat, and corn. The sector had been under pressure for years: first due to the export restrictions imposed by China since 2021, the world's largest producer of nitrogen and phosphate fertilizers; then due to sanctions against Russia and Belarus, important exporters of potash; and finally due to the 10% tariff on imports introduced in the United States by the Trump administration.

Now the conflict in the Middle East has further aggravated the situation for Swiss commodity traders. According to the United Nations Food and Agriculture Organization (FAO), between 20% and 30% of the world's fertilizers pass through the Strait of Hormuz. Since the start of the conflict, the price of urea has increased by 60%. And the situation could get worse: the Gulf region produces 25% of the world's sulfur, and half of all the sulfur used to produce fertilizers such as DAP comes from there.

In the United States, the price of wheat has risen by 6%, while in Thailand, the price of rice has increased by 9%. The FAO predicts a 0.5-1.6% drop in global household disposable income, with the most significant effects in Asia and Africa.

"About 35% of the world's urea and 25% of ammonia come from the Gulf region. Suppliers cannot be changed overnight," Florence Schurch, secretary general of the Swiss commodity trading association Suissenégoce, told Swissinfo. Behind the recent U.S. decision to ease sanctions against Belarus (one of the world's leading potash exporters) is also the goal of containing fertilizer costs for agriculture, Schurch emphasized. Even a few dollars' increase per tonne of potash, she explained, could hit farmers and agricultural workers in the world's poorest regions hard.

"Food and fertilizer prices would rise. In a rich country like Switzerland, this is a painful increase but still absorbable. In the poorer countries of Africa and Asia, however, the consequences are much more serious: farmers end up using fewer fertilizers, harvests decrease, and the risk of food insecurity becomes real."

Some Swiss companies active in fertilizer trading, such as Keytrade, had already decided to avoid trade routes through the Middle East before the outbreak of the war in Iran. "As a company, it was the right choice: we left the Arabian Gulf and focused, for example, on Europe, North Africa, the United States, and Brazil," Melih Keyman, founder of Keytrade, told Swissinfo. "When the war started, this proved to be an advantage, as the supply from the Gulf was no longer available."

Operational details

Glass: Rising Energy Costs

The production of glass requires large amounts of energy: the necessary raw materials – silica sand, limestone, and sodium carbonate – must be melted at a temperature of around 1,500 °C, and 75% of the energy used to power the furnaces comes from natural gas. 'We can count on a good supply of recycled glass and locally sourced sand, but we are not entirely protected from fluctuations in energy, diesel, and transportation costs. We are closely monitoring the situation,' declared a spokesperson for the Swiss glass producer Vetropack.

'If we were to introduce surcharges related to energy costs, we would communicate this directly to our customers.' The increase in energy prices could also reflect on the cost of beverages, warns the Swiss industry in the sector, which includes producers of mineral water, beer, and soft drinks. In 2024, Switzerland produced 510 million liters of bottled mineral water, of which 3.7 million were destined for export.

Impact on Consumers

The rise in fertilizer and energy prices could have a significant impact on Swiss consumers. According to the FAO, the global decline in household disposable income could reach up to 1.6%, with more marked effects in Asia and Africa. In Switzerland, where purchasing power is higher, the impact could be less severe but still tangible.

'In a rich country like Switzerland, this price increase is painful but still absorbable,' declared Florence Schurch of Suissenégoce. However, even in Switzerland, the rise in prices could influence consumption habits, pushing consumers to seek cheaper alternatives or reduce the quantity of products purchased.

Future Scenarios

The current situation could evolve in different ways. If the conflict in the Middle East were to continue, the prices of fertilizers and energy could continue to rise, with consequent repercussions on the prices of food and beverages. On the other hand, if the conflict were to be resolved quickly, prices could stabilize or even decrease.

In any case, Swiss companies in the food and raw materials sector will have to adapt to a situation of greater uncertainty and volatility. This could involve investments in new technologies, diversification of supply sources, or changes in production and distribution strategies.

Conclusion

The war in Iran and the blockade of the Strait of Hormuz are putting pressure on the Swiss food industry, with repercussions that could reach consumers. Although Switzerland is in a relatively privileged position compared to other countries, the rise in fertilizer and energy prices represents a significant challenge. Swiss companies will have to adapt to a situation of greater uncertainty, while consumers may have to deal with higher prices for food and beverages.

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Key points

What consumers can do

If you are a Swiss consumer, there are several things you can do to mitigate the impact of rising prices:

1. Monitor prices: Keep an eye on food and beverage prices, especially those that may be affected by the increase in fertilizer and energy costs. 2. Look for alternatives: If the prices of some products rise too much, consider opting for cheaper alternatives or reducing the quantity of products purchased. 3. Plan your purchases: Try to plan your purchases to take advantage of offers and discounts, especially for non-perishable products. 4. Reduce waste: Try to reduce food and beverage waste so you can get the most out of your purchases. 5. Use the Frontaliere Ticino calculator: To get a clearer idea of how rising prices might affect your household budget, you can use the Frontaliere Ticino calculator. This tool will help you calculate your disposable income and plan your purchases more efficiently.

What businesses can do

If you are a business in the food or raw materials sector, there are several strategies you can adopt to cope with the current uncertain situation:

1. Diversify your supply sources: Try to diversify your supply sources so that you do not depend too much on a single region or country. 2. Invest in new technologies: Consider investing in new technologies that can improve the efficiency of your production and reduce costs. 3. Adapt your production and distribution strategies: Be ready to modify your production and distribution strategies as the situation evolves. 4. Monitor markets: Keep an eye on commodity and energy markets so you can react quickly to any changes. 5. Use the Frontaliere Ticino calculator: To get a clearer idea of how rising prices might affect your business, you can use the Frontaliere Ticino calculator. This tool will help you calculate your costs and plan your strategies more efficiently.

Conclusion

The war in Iran and the blockade of the Strait of Hormuz are putting pressure on the Swiss food industry, with repercussions that could reach consumers. Although Switzerland is in a relatively privileged position compared to other countries, the rise in fertilizer and energy prices represents a significant challenge. Swiss companies will need to adapt to a situation of greater uncertainty, while consumers may have to deal with higher prices for food and beverages. Use the Frontaliere Ticino calculator to plan your purchases and strategies more efficiently.

Source: tvsvizzera.it