THE Philippines’ dependence on fertilizer imports has made it particularly at risk from supply disruptions arising from the Middle East war, a Fitch unit said.
With prices rising and the war on Iran likely to become extended, application rates for 2026-2027 grain crops could plunge across Southeast Asia, BMI said in a March 24 report released on Wednesday.
The scale of the impact, however, is expected to vary with Indonesia, Malaysia and Vietnam “among the most insulated” due to domestic fertilizer production, BMI said.
“By contrast, we believe that the Philippines is more fundamentally exposed to an extended disruption to nitrogenous fertilizer supplies given its high reliance on import,” it added.
BMI noted that the government earlier this month had flagged supply uncertainties despite over 80 percent of the fertilizer requirement to September having already been bought.
“With approximately 75 percent of corn plantings occurring between April and May and around 60 percent of rice plantings taking place from March to May, delay to fertilizer arrivals past key application windows could pose significant downside risks to the upcoming crop,” it said.
Thailand, while also reliant on imports, has said that it had enough supplies up to August, which would help buffer against shocks for the coming crop year.
Since the war started on Feb. 28, global urea prices have sharply increased as exports from the Gulf Cooperation Council (GCC) region became constrained, BMI noted.
The GCC, which comprises Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain and Oman, accounted for some 20 percent of the world’s nitrogenous fertilizer exports by value and supplies a significant portion of the natural gas used in fertilizer production.
Risks from phosphatic fertilizer supply disruptions are broader for the region, BMI said, as sulfur, a key input, not only comes from the GCC but also China, which is expected to prioritize domestic needs.
Beyond the fertilizer risks, grain output across the region could also fall because of a looming El Niño — a weather pattern that brings droughts — that could emerge by June and intensify by August, BMI added.
Food security threat
As this developed, a top World Trade Organization official warned that disruptions to fertilizer supplies caused by the Middle East war pose a double threat to global food security through scarcity and high prices.
Iran has virtually shut the Strait of Hormuz, choking a vital transit route for oil and gas — as well as fertilizers.
A third of the world’s fertilizers normally transit the strait, and the disruption has prompted multiple warnings about the impact on food production.
“Fertilizers are the number one issue of concern today. If there is no more fertilizer, there is an impact on quantities but also on prices,” WTO Deputy Director-General Jean-Marie Paugam told Agence France-Presse (AFP).
“The effect compounds the following year: harvests shrink and prices rise.”
The Gulf’s ample supplies of natural gas, a key ingredient in artificial fertilizers, have made the region a major manufacturer.
But production has been severely impeded by the war, with some major facilities forced to shut down.
Major food exporters such as India, Thailand and Brazil depend on the Gulf for urea, a nitrogen-based fertilizer, making them vulnerable.
Because the war is only a few weeks old, there is currently no fertilizer shortage, Paugam said.
“But if fertilizers from the Gulf do not circulate, we will feel a direct impact on supplies to major producer countries just as planting seasons begin for the crops that will be harvested next year,” he said.
“If the Strait of Hormuz is blocked for three months, the impact will be significant.”
Net food-importing countries would be in a very bad position, including “a large part of west Africa and north Africa,” Paugam noted.
This effect can be amplified if countries start stockpiling, as happened during disruptions to international trade at the height of the Covid-19 pandemic.
Covid set back the fight against hunger worldwide. Since then, the world returned to its trajectory towards eliminating hunger by 2030, one of the goals adopted by UN member states in 2015.
“But with the risks linked to the war in the Middle East, there is once again a risk of falling off track,” Paugam warned.