University of Otago economics researcher Dr Murat Ungor said increasing fertiliser prices, caused by the ongoing United States-Israel conflict with Iran, were likely to result in "very significant" price increases on primary products at the supermarket, as early as June this year.
He said the Middle East produced a massive portion of the world’s supply of fertiliser, particularly nitrogen-based products, and up to a third of all global fertiliser trade passed through the Strait of Hormuz.
He said the conflict had created a serious "chokepoint" in the strait, putting fertiliser supply to New Zealand at serious risk of being halted for weeks or even months.
While it had already caused prices for petrol, diesel and aviation fuel to increase dramatically, he expected the same to happen for fertiliser.
"Nitrogen-based fertilisers are the most widely used fertilisers worldwide and in New Zealand.
"It helps crops grow faster and it feeds animals better, which helps us grow our major exports like beef, veal, lamb and dairy products.
"But to be able to export these products, you need to produce them, and to be able to produce them, you need production inputs.
"One of the production inputs is fertilisers and the other one is diesel."
He said increased diesel and fertiliser prices could only lead to one thing — a "double increase" in the production cost for our primary sector.
New Zealand was one of the world’s largest exporters of dairy, beef and veal, and without fertiliser, those exports would shrink.
"Without exports, the entire economy will feel the impacts."
And eventually, as early as June this year, all those costs would also be reflected on New Zealand’s supermarket shelves, he said.
"There will be a very significant price rise on primary products, and it will all fall on the shoulders of consumers."
Dr Murat said he did not believe there was a shortage of fertiliser at present.
"But if the conflict is not going to be resolved, and if the Strait of Hormuz is going to be closed for a significant amount of time, and if the pace of the war will escalate, then it is likely that both in terms of petrol, diesel, as well as fertilisers, we can talk about both dramatic price increases, as well as the supply problem."
He said it was "extremely important" the country came up with a long-term national food strategy to prepare for the worst-case scenario.
Federated Farmers Otago president Luke Kane said fertiliser supply was "still fine", but prices had crept up.
"The distributors that I’ve spoken to ... are kind of in a holding pattern — same as everyone else — trying to figure out what freight will be like in five months’ time when farmers will want to be spreading fertiliser again in spring.
"Realistically, we’ve got to be prepared both ways — prepared for a slight price increase or prepared for a massive price increase.
"I guess most farmers will be formulating budgets accordingly," he said.
Ravensdown chief sales and marketing officer Daniel Pranic said the situation in the Middle East would not affect the company’s ability to supply fertiliser during autumn.
