Energy and Fertilizers: What Future Lies Ahead?

Energy and international tensions

The war first in Ukraine and then the tensions in Iran and, more generally, in the Middle East have caused, and continue to cause, strong pressure on petroleum product prices, with already tangible effects.

The increase in the cost of transporting goods is one of the first consequences of this situation. However, many products linked to so-called “energy-intensive” companies, namely production activities that consume large amounts of energy, are also at risk of price increases.

Indeed, Italy continues to have one of the highest electricity costs in Europe. In 2025, the average wholesale electricity price was approximately €116/MWh, compared with an EU average of around €85/MWh, with very significant differences compared with countries such as France and Spain.

The main causes are:

• strong dependence on natural gas for electricity production;
• lower availability of nuclear energy compared with France;
• system costs and the structure of the energy market.

The impact on the food supply chain

The cost of energy inevitably also affects the food supply chain. When energy prices rise, this cost is added to those of raw materials, production and distribution, almost always ending up being reflected in the final price.

In the bakery sector, meaning bread-making and pastry-making, energy has a very significant impact, because it involves:

• electric and gas ovens;
• proofing chambers;
• blast chillers;
• mixers;
• air conditioning of production laboratories;
• refrigerated transport.

Without causing alarm, it should be said that it is not certain that a new crisis like the one in 2022, or even worse like the one in 2008, will occur. However, many analysts believe that Europe and Italy will have to live for years to come with energy costs higher than pre-crisis levels.

Naturally, if the war in Ukraine and, above all, the tensions linked to Iran and the Middle East were to ease or come to an end, this pre-crisis situation could gradually subside.

The issue of fertilizers

However, there is another important aspect to consider in the short term: the cost of fertilizers.

We have learned how much fertilizer production depends largely on natural gas (nitrogen fertilizers are produced using enormous quantities of natural gas). Today, there is already strong pressure on imported fertilizers, including from strategic areas such as the Middle East, resulting in price increases.

More than the cost itself, however, what is worrying is the possible lower availability. A shortage or sharp increase in the cost of fertilizers could lead to a reduction in harvests, meaning a lower quantity produced per hectare. This scenario could cause the prices of many food products to rise, even significantly.

In today’s agricultural world, fertilizers have become essential and directly influence the production of:

• wheat;
• corn;
• rice;
• vegetables;
• animal feed.

Without fertilizers:

• harvests decrease;
• quality may worsen;
• the risk of shortages increases;
• the entire food supply chain comes under pressure.

And when less food is produced, prices inevitably tend to rise; unfortunately, this scenario is likely to become realistic as early as next autumn.