Let’s talk about that bag of lettuce that’s in your fridge.

It most likely had its start in California’s Salinas Valley, grown in soil that was fertilized with nitrogen products derived from natural gas. It was harvested by equipment running on diesel. It was washed, dried, and sealed in a petroleum-based plastic film engineered specifically for breathability. It was loaded onto a refrigerated 40-foot trailer also running on diesel and then driven 2,800 miles across the country to a distribution center in the Northeast, then on to a supermarket near you.

Think of that bag of lettuce, from field to shelf, as a petroleum product. And right now, as you know, petroleum is at war.

The Iran war didn’t just spike gas prices. It put a hidden tax on every salad in America — and on everything else in the grocery cart.

Since the U.S. and Israel began strikes on last month, the Strait of Hormuz — a 21-mile-wide waterway through which roughly one-fifth of global oil and one-third of globally-traded fertilizer flow — has been effectively shut to commercial shipping. The effects that followed are staggering, and they are far from finished rippling through the U.S. food system.

U.S. crude oil prices have risen more than 40% since the war began. The national average price of on-highway diesel hit $4.86 per gallon on March 9 — a jump of nearly 96 cents in a single week, the largest weekly increase since the government began tracking diesel prices in 1994. (The next EIA release is scheduled for Tuesday, March 17.) Brent crude has topped $100 per barrel for the first time since Russia’s invasion of Ukraine.

A second price shock is unfolding and it’s all about fertilizer.

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In the first week of the war, the price of urea — the nitrogen-rich compound that is the foundation of most crop fertilizers — jumped 30% at the import hub of New Orleans, according to the Fertilizer Institute. By mid-March, Fortune was reporting a 35% spike from pre-war levels. Individual spot prices have reportedly reached $850 a ton.

One major problem is that according to Agriculture Secretary Brooke Rollins roughly 25% of farmers had not purchased fertilizer for the planting season when the war began – now they face a 30-35% price increase.

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The Presian Gulf region dominates global fertilizer supply because it sits atop some of the world’s cheapest natural gas, and natural gas is the essential feedstock for producing ammonia, which becomes urea and then becomes the nitrogen that grows the world’s crops. Countries in the region — Egypt, Iran, Qatar, Saudi Arabia, and the UAE — account for roughly 49% of global urea exports and 30% of ammonia exports, according to the American Farm Bureau Federation.

When the Strait of Hormuz closes, the world’s fertilizer supply chain doesn’t just get more expensive. It gets structurally disrupted.

Lettuce Is Just The Beginning

I ran the math on what this triple shock — fuel, packaging and fertilizer — actually costs the consumer, starting with that bag of lettuce.

Shipping a 40-foot refrigerated truckload of bagged lettuce from California to New York now costs roughly $1,100 to $1,300 more than it did before the war began because the price of diesel fuel has increased and carrier fuel surcharges are up. Spread across the approximately 25,000 bags in that load, and marked up through the distributor and retailer, the transportation increase alone adds roughly 8 to 10 cents to the consumer price of a single bag.

Then add packaging. Every bag of lettuce is made from petroleum-derived plastic film — primarily polypropylene and low-density polyethylene. Resin prices track crude oil with a four to six week lag, and they are already climbing. The packaging cost increase adds another 2 cents or so at the shelf.

Transportation increase per bag (shelf price): +$0.09

Packaging resin increase per bag (shelf price): +$0.02

Total Iran war increase per bag: ~$0.11

Bags of bagged lettuce/salad sold annually in the U.S.: ~1.7 billion

Total added annual cost to U.S. consumers (lettuce only): ~$187 million

Eleven cents. It doesn’t sound like much. But lettuce is one item. There are roughly 40,000 SKUs in the average U.S. supermarket. Apply the same fuel and packaging math across every perishable item in a shopping cart — fresh vegetables, dairy, meat, deli, bread — and the Iran war adds an estimated $85 to $120 to the average American household’s grocery bill just on perishables. And that is if the war ends relatively quickly. If it goes on for six months or more, those numbers will grow substantially.

And that figure doesn’t yet include the fertilizer shock. That one hasn’t shown up at the grocery store yet. It’s still in the ground.

The Slow-Motion Freight Train Nobody Is Talking About

Here is what worries me most as I watch the coverage of this war: everyone is focused on gas prices, which are real and immediate and visible every time you drive past a station. But the fertilizer story is the slow-moving freight train that will hit U.S. grocery shoppers 6 to 12 months from now, long after the initial shock has faded.

As I previously stated, about 25% of U.S. farmers which represents roughly $7.3 billion in planned purchases, had not yet locked in their spring fertilizer orders and the added cost to just those buyers, for just this spring is an estimated $2.3 billion. If the war persists through the full planting and growing season, the numbers get significantly larger. A sustained 30% increase applied to the full $29.2 billion fertilizer baseline means roughly $8.8 billion in added annual costs to U.S. agriculture. That would be a structural shock to the farm economy.

The crop that concerns me, and the food industry, the most is corn. Corn consumes 78% of all nitrogen fertilizer applied to U.S. crops. Fertilizer represents 33 to 44% of a corn farmer’s total operating costs. Analysts are already projecting that up to 1.5 million acres may shift from corn to soybeans this spring, as farmers find they simply cannot pencil out the economics.

Here is why that matters to every shopper, not just farmers: Corn is the infrastructure of the U.S. food supply. It feeds the beef cattle, the hogs and the chickens. It becomes the corn syrup in thousands of processed food products. It fuels the ethanol that blends with gasoline. When corn gets expensive, or when less of it gets grown, the price shock echoes through every protein counter and center-store aisle in the country.

Here is the dynamic that concerns me most as a longtime observer of this industry: In every supply chain shock I have covered over the past 30-plus years, the consumer is always the last to know and the last to be protected.

Every cost increase in this supply chain gets marked up at every step before it reaches the shelf. A 5-cent raw transportation increase becomes a 10-cent consumer price increase after distributor and retailer margins are applied. A fertilizer cost spike at the farm in March becomes a beef price increase at the supermarket by September. The Fertilizer Institute’s own chief economist, Veronica Nigh, said consumers will face more cost pass-through from this crisis than anything we have seen before.

And unlike in 2022, when businesses had some buffer to absorb shock, and some could resort to the now-familiar trick of shrinkflation to disguise price increases, today’s food industry is already squeezed. Tariffs over the past year have eaten into margins across the supply chain. Retailers have been absorbing costs to protect volume. There is very little margin left in the system.

Based on everything I’m tracking, it’s going to show up in the produce aisle, the meat case, the dairy cooler, and across every corner of U.S. supermarkets — starting now and accelerating for the next 6 to 12 months regardless of how quickly the war stops.

Food prices in the United States are already 24% above pre-Covid levels. The American consumer has been absorbing cost after cost for five years. The Iran war is not an isolated event landing on a resilient economy. It is landing on a food system and a consumer base that have very little cushion left.

The Strait of Hormuz is 21 miles wide. Its closure is reaching into every American grocery store and home.

Next week I’ll take a look at how the Iran war is affecting the price of beef — now and in the future

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