Recent fertiliser market shocks have exposed an uncomfortable truth: the global food system is highly dependent on concentrated, energy-intensive agrochemical supply chains and highly exposed to fluctuations in fertiliser cost and availability.
Following conflict escalations between Iran and the US between February and March 2026, fertiliser prices rose by 30% as trade through the Strait of Hormuz was disrupted, while following Russia’s invasion of Ukraine in 2021, prices more than doubled before rising a further 55% in 2022.
Agrochemical dependence also creates a wider resilience challenge. While these inputs support agricultural production, inefficient and excessive use can contribute to climate change, water pollution and biodiversity loss, putting further pressure on the natural systems on which production depends.
Animal agriculture sits at the intersection of these risks. Its dependence on fertilisers and pesticides extends upstream through the crops used for animal feed. In June 2026, for example, Europe’s record heat destroyed an estimated 9 million tonnes of grain, equivalent to around €2 billion (US$2.2 billion) in lost revenue, providing a stark reminder of the financial consequences physical risks can create across agricultural value chains.
As participants at COP17 in Yerevan, Armenia undertake the first global review of progress towards the Kunming-Montreal Global Biodiversity Framework’s (GBF) 2030 targets, Target 7 will also bring nutrient losses and pesticide risks into focus.
Against this backdrop, this Insight piece examines the material risks agrochemical dependence creates for animal protein companies and their investors, where corporate responses currently fall short, and the opportunities emerging from a transition towards more resilient production systems.
Why agrochemical dependence is financially material
Animal protein producers are significantly dependent on agrochemicals through their feed crops, particularly soy, maize and wheat, and this exposure creates financially material risks for companies and their investors.
Concentration risk: Feed accounts for up to 70% of total production costs across the animal protein value chain and 70% of soy and 60% of maize grown and traded globally are used for animal feed. These crops are major users of agricultural inputs – accounting for 44% of highly hazardous pesticide sales in 2020, according to an analysis by Unearthed and Public Eye.
Cost and supply risk: Fertiliser production depends heavily on energy-intensive processes, leaving feed crop costs exposed to disruption and volatility in agrochemical and energy markets. Higher fertiliser and energy costs can be passed through to feed prices, squeezing producers' margins.
In March 2026, for example, pig farmers in China were facing CN¥ 280 - CN¥ 350 (US$41.7 – US$52.2) losses per pig sold, as rising soymeal and corn prices – driven by rising fertiliser, energy and freight costs – converged with oversupply and tumbling hog futures and cash prices.
Physical risk: Excessive use of fertilisers and pesticides can also contribute to longer-term risks to agricultural production, such as climate change, soil degradation and water pollution, harming the ecosystems on which feed production depends. This is particularly relevant to animal protein, with up to 25% of mineral fertiliser globally used to produce livestock feed.
Over time, this degradation reduces agricultural resilience, increasing the risk of crop failures from pests, diseases, unproductive soils and extreme weather, and translates to greater volatility in the availability, quality and cost of feed crops for animal protein companies.
Transition risk: Global commitments, such as GBF Target 7, which calls for halving excess nutrient losses and pesticide risks by 2030, and the Belém Declaration on Fertilisers, are accelerating efforts to address agricultural pollution, creating transition risks for companies dependent on agrochemical-intensive supply chains.
As national governments work to translate these goals into national policies, companies could face higher production costs as feed production adapts to tighter requirements. Faroese salmon producer Bakkafrost, for example, already pays a premium for certified soy that limits pesticide use and identified tighter feed commodity regulation as a potential source of cost increases in its 2025 annual report.
Agrochemical risks remain unaddressed by corporates
FAIRR’s research suggests that companies are not yet keeping pace with agrochemical risks, lacking visibility over where they sit in the value chain and, as a result, their exposure.
Only three in 10 pork and poultry producers from FAIRR’s Waste and Pollution Engagement included feed production in their water quality risk assessments, for example.
FAIRR’s 2026 Regenerative Agriculture report also found that while 52% of 78 companies with regenerative agriculture initiatives aimed to reduce agrochemical inputs, only 12% acknowledged fertiliser and pesticide use as a material business risk or disclosed measuring relevant outcome metrics. Furthermore, no company has set a target to reduce pesticide use as part of its regenerative agriculture programme.
This is a problem for investors since companies may acknowledge the issue without providing enough evidence to assess the scale of exposure, the credibility of their response or whether capital allocation is changing accordingly.
Managing agrochemical risks through system transformation
Reducing agrochemical risks while maintaining productive and resilient food systems requires solutions to be adopted that address agricultural production and food consumption.
The 2025 EAT-Lancet Commission reinforces this systems approach, finding that the greatest environmental gains come from combining healthier diets with more sustainable production and reduced food loss and waste. Together, these shifts can reduce pressure on agricultural land and inputs (including agrochemicals) while maintaining food production within environmental limits.
1. Use inputs more efficiently: On the production side, precision agriculture and improved nutrient management can reduce unnecessary inputs by using soil, weather, nutrient and pest data to make fertiliser and pesticide applications more targeted, while technologies such as mechanical and robotic weed control can provide alternatives to chemical applications.
Adoption is already gaining ground, with around 18% of EU farms using precision farming technologies or practices in 2023, covering 44% of the bloc’s utilised agricultural area.
With more than half of the nitrogen fertiliser applied to crops estimated to be lost to the environment, there is also a significant opportunity to improve efficiency through better nutrient management and recycling.
2. Incorporate sustainable alternatives and practices: Biological alternatives, including biopesticides or microbial inputs, offer further opportunities to substitute conventional agrochemicals, while also presenting a strong commercial opportunity. The global microbial biocontrol market was worth an estimated €5.6 billion (US$6.3 billion) in 2025 and is projected to reach €14.2 billion (US$15.9 billion) by 2032.
However, efficiency and substitution alone do not remove underlying dependency. Crop rotation, nitrogen-fixing legumes, cover crops, nutrient recycling and integrated production systems can improve nutrient cycling and soil health, reducing reliance on external inputs. These approaches can also reduce operating costs and support farm profitability, if upfront transition costs and temporary yield risks are well managed. FAIRR’s 2026 Regenerative Agriculture report highlights this potential.
3. Reduce structural dependency through system transformation: Production-side (or supply-side) measures can reduce input intensity, but they do not fully address the scale of demand placed on land, feed and nutrients. Over the longer term, protein diversification can therefore complement production-side measures by reducing reliance on input-intensive animal-protein supply chains, as FAIRR’s work on the topic highlights.
The EAT-Lancet Commission estimates that by 2050, global agricultural nitrogen use could increase by 41% from 2020 levels under business as usual, compared with 27% if diets shift and 15% when dietary change is combined with improved agricultural productivity and reduced food loss and waste.
For investors, the agrochemical transition raises two questions: are portfolio companies credibly reducing their nutrient exposure, and which technologies, infrastructure and business models can drive the transition.
COP call to action
As governments, companies, investors and other food and agriculture stakeholders gather in Yerevan, the focus should be on moving from ambition to implementation by:
creating clearer policy signals, incentives and financing mechanisms;
translating commitments into measurable targets, capital allocation and business model transformation;
using stewardship and capital allocation to support credible transition pathways and reduce continued exposure to high-risk inputs.
Reducing agrochemical dependence is ultimately a systems challenge. Progress will depend on aligning policy, corporate demand, finance and on-farm implementation around a clearer transition pathway that strengthens resilience and productivity while reducing pollution and nature-related risks.
FAIRR at COP17 FAIRR will host two discussions at COP17 to accelerate the agrochemical transition. The first will explore the policy and financing conditions needed to mobilise private capital. The second will convene organisations working across the agrochemical landscape to align on a common narrative, clarify how different stakeholders can influence most effectively, and strengthen coordination to drive the transition. |
FAIRR insights are written by FAIRR team members and occasionally co-authored with guest contributors. The authors write in their individual capacity and do not necessarily represent the FAIRR view.
Written by
Junior Analyst
Technical Specialist, Research & Engagements - Nature
