Urea price surge threatens Nigerian food inflation
The World Bank projects urea prices will hit $700 per metric tonne in 2026, nearly 60% above 2025. That is a body blow to Nigerian agriculture, which imports about 70% of its urea. The bank's broader forecast says fertilizer prices could rise more than 30% in the year, per Ecofin Agency.
Nigeria's farmers already face record-high input costs. A 60% jump in urea will push maize, rice, and wheat prices higher. The pass-through to food inflation is direct. Nigeria's food inflation was already above 30% in early 2026. This surge makes the Central Bank's inflation target of 15 to 17% by year-end look naive.
What the World Bank didn't say
The $700 figure is a baseline. Qatar's urea plant closures and Middle East supply disruptions have already created what industry analysts call a 'perfect storm' in global urea markets, according to Metals-Hub. The bank's projection assumes no further escalation. If Iran or Russia tighten exports, $800+ is possible. That scenario would break Nigerian smallholders.
Most Nigerian farmers buy fertilizer on credit from input distributors. Those distributors borrow from commercial banks at 25 to 35% interest. Urea at $700 means their capital requirement doubles. Cash flow breaks. Agent networks that extend credit to farmers will ration supplies. Some will default. The ripple effect hits rural banking and mobile money float management as agricultural loan repayments dry up.
First: the government's fertilizer subsidy budget will blow up. Nigeria allocated N300 billion for the 2026 farming season at a $450/tonne urea price. At $700, the subsidy cost jumps to N467 billion overnight. The Ministry of Agriculture will either ask for a supplementary budget or cut the subsidy, leaving farmers exposed. Either way, food output drops.
Second: food imports will rise. Nigeria already spends $2 billion on wheat imports annually. Higher domestic maize and rice costs will push millers toward imports. The naira is weak. The trade deficit widens. The CBN's forex reserves, already under pressure, take another hit.
Third: inflation becomes sticky. Food is 50% of Nigeria's CPI basket. A 60% urea cost increase adds 3 to 5 percentage points to headline inflation through the second half of 2026. The CBN's hawkish Monetary Policy Committee will likely hike rates again, strangling credit for SMEs and consumers.
Who benefits? Not who you think
Export-oriented fertilizer producers in Morocco and Egypt win. OCP Group and others with access to cheap gas and integrated phosphate production will capture market share. Nigerian blenders who mix imported urea with local NPK can pass costs through but face working capital strain. The real winners: global agribusiness traders like Cargill and Archer-Daniels-Midland that move urea cargoes. They love volatility.
Pension funds holding Nigerian treasury bills? The higher inflation scenario means real yields turn negative. Inflation-indexed bonds or commodity-linked assets look better.
The bottom line: urea at $700/mt is not a blip. It reflects a structural shift in energy markets and fertilizer supply chains. For Nigeria, this is an inflation accelerant that exposes the fragility of import-dependent agriculture. The CBN cannot print its way out. The Ministry of Agriculture cannot subsidize its way out. The only hedge is faster adoption of organic alternatives and domestic urea production, but those take years. In 2026, farmers and consumers take the pain. Expect food inflation to stay above 20% through the year, and the MPC to keep rates at 28% or higher.