What the Energy Crisis Means for Fertilizer and Food Security

By Qingfeng Zhang

Asia and the Pacific now faces a different kind of shock to food security as conflict in the Middle East drives up fuel and fertilizer costs rather than cutting global grain supplies.

The latest Middle East crisis is reshaping global food security, but mainly through different channels than the Russian invasion of Ukraine. While this directly disrupted grain and fertilizer exports, today’s shock is driven primarily by shipping disruptions, and higher energy and fertilizer prices.

Instead of an immediate spike in food prices, this is a broad, system-wide shock rippling through interconnected markets and squeezing the food system. For Asia and the Pacific, heavily reliant on imported energy and fertilizers, the implications are significant.

The Strait of Hormuz handles about a quarter of global seaborne oil trade and a large share of fertilizer exports, including more than a third of global urea exports. Disruptions there are driving up fuel, fertilizer, freight, and insurance costs.

These increases are feeding through into higher production, local transport, and retail food costs, even though global food supplies and stocks remain relatively stable. More worrying, higher energy and fertilizer prices today influence farmers’ decisions about how much to plant and how much input to apply; if high costs persist, reduced fertilizer use this season may mean lower yields next harvest.

Asia and the Pacific is particularly vulnerable to this type of shock.

As global costs rise, pressures transmit quickly—from farms to markets to households. For import-dependent countries such as Cambodia, the Lao People’s Democratic Republic, Myanmar, and Sri Lanka, the risks are acute. Larger economies—including India, Indonesia, Pakistan, Philippines, and Viet Nam—face fiscal pressures from fuel and fertilizer subsidies, alongside rising food prices.

The impact is system wide.  Farmers struggle to make profit as costs rise faster than farmgate prices, leading to lower investment in inputs. Agribusinesses need more working capital. Higher prices in shops reduce household spending power, leading to poorer diets.