War in Iran: Pressure on Swiss Food Industry

Context

TL;DR

• Iran war blocks Strait of Hormuz, disrupting trade
• Fertilizer prices surge 60%, impacting food production
• Swiss food industry faces rising costs and risks

Key facts

• Cosa: Impact of Iran war on Swiss food industry
• Quando: From April 2026
• Dove: Switzerland and Middle East
• Chi: Swiss food and commodities sectors
• Importo: +60% urea price, +6% US wheat, +9% Thai rice
• Fertilizer Trade: 35% of world's urea and 25% of ammonia come from the Gulf region
• Glass Production: 75% of energy used in glass production comes from natural gas
• Impact on Consumers: Global decline of 0.5-1.6% in household disposable income expected

In brief

• Iran war blocks Strait of Hormuz
• Fertilizer prices +60%
• Risk of food insecurity in Asia and Africa

Key facts

• What: Impact of Iran war on Swiss food industry
• When: From April 2026
• Where: Switzerland and Middle East
• Who: Swiss food and commodities sectors
• Amount: +60% urea price, +6% US wheat, +9% Thai rice

The war in Iran is putting pressure on the Swiss food industry, with effects that could soon reach consumers. The conflict in the Persian Gulf and the blockade of the Strait of Hormuz have slowed the trade of essential goods and pushed up energy prices. Switzerland, home to large multinational food companies and global commodities traders, is starting to feel the effects.

Fertilizer trade

International fertilizer trade reached 169 million tonnes in 2024. About half of the world's 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 China's export restrictions, then due to sanctions against Russia and Belarus, and finally due to the 10% tariff introduced in the United States. Now the conflict in the Middle East has further aggravated the situation.

According to the Food and Agriculture Organization of the United Nations (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%. The Gulf region produces 25% of the world's sulfur and is the source of half of all the sulfur used to produce fertilizers such as DAP.

"About 35% of the world's urea and 25% of ammonia come from the Gulf region. It is not possible to change suppliers from one day to the next," said Florence Schurch, secretary general of the Swiss commodities trading association Suissenégoce. Schurch also emphasized that a price increase of a few dollars per tonne of potash could severely affect farmers in the world's poorest regions.

"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 concrete."

Some Swiss companies active in fertilizer trading, such as Keytrade, had already decided to avoid commercial 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," said Melih Keyman, founder of Keytrade.

Glass bottle production

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 about 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 following the situation closely," said a spokesperson for the Swiss glass producer Vetropack.

"If we were to introduce supplements 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, which includes mineral water, beer, and soft drink producers. In 2024, Switzerland produced 510 million liters of bottled mineral water, of which 3.7 million were destined for export.

Operational details

Impact on Consumers

The increase in the prices of fertilizers and energy could have a significant impact on Swiss consumers. According to the FAO, a global decline of 0.5-1.6% in household disposable income is expected, with the most significant effects in Asia and Africa. In Switzerland, the price hike could be absorbable, but still painful.

Most Exposed Sectors

In addition to the fertilizer trade and glass bottle production, other sectors of the Swiss food industry could be affected by the situation. For example, chocolate sales at airports are suffering from flight cancellations caused by the war. The trade of other raw materials could also be influenced, with possible repercussions on food product prices.

Future Scenarios

If the situation were to worsen, the effects could be even more severe. Switzerland, as the home of major food multinationals, could face significant challenges. However, the ability to adapt and the diversification of trade routes could help mitigate some of the negative impacts.

Comparison with the Previous Situation

Before the conflict, the trade of fertilizers and other raw materials was proceeding without major obstacles. The export restrictions imposed by China and the sanctions against Russia and Belarus had already created some tensions, but the situation was manageable. Now, with the blockade of the Strait of Hormuz, the situation has become much more complex.

Implications for Cross-Border Workers

Cross-border workers employed in the food sector or in raw materials could face significant changes. The increase in the prices of raw materials could affect production costs, with possible repercussions on wages and working conditions. Additionally, flight cancellations could impact delivery times and logistics, making the work of those operating in these sectors more difficult.

Useful tools to protect your net income

To reduce FX leakage, compare CHF-EUR exchange options and banks for cross-border workers.

Key points

What to do

If you work in the food or raw materials sector, it's important to closely monitor the evolution of the situation. Stay updated on the latest news and decisions from Swiss and international authorities. If you're a cross-border worker, consider the potential impact on your activity and plan accordingly.

Useful tools

To get a clearer picture of the situation, you can use the salary calculator to compare your current earnings with those expected in different scenarios. Additionally, the permit comparator can help you understand which permits might be necessary to continue working in Switzerland in case of regulatory changes.

Conclusion

The war in Iran is putting pressure on the Swiss food industry, with possible repercussions for consumers and workers in the sector. Monitor the situation and plan accordingly to best face future challenges. Use the tools at your disposal to stay informed and prepared.

For more information, consult the salary calculator and the permit comparator.

Source: tvsvizzera.it