Asia’s next food crisis is under way. After the US-Israeli strikes on Iran, shipping through the Strait of Hormuz collapsed, sending shock waves across energy, fertiliser and food systems. Fuel, freight and fertiliser costs are rising sharply, amplified by skyrocketing insurance premiums – feeding directly into the price of every tonne of fertiliser that still reaches the market.
The scale of disruption reflects the strait’s outsize role in global trade. It carries around one-third of globally traded fertiliser, one-quarter of seaborne oil and a major share of liquefied natural gas (LNG) – the primary feedstock for nitrogen fertiliser production.
Asia is heavily exposed. It normally takes 35 per cent of the Gulf’s urea exports, 53 per cent of its sulphur and 64 per cent of its ammonia, with import reliance ranging from 36 per cent of fertiliser in Sri Lanka to 53 per cent in Bangladesh. Equally alarming is Asia’s energy dependence. Last year, about 80 per cent of oil and oil products transiting the strait went to Asia, alongside almost 90 per cent of the LNG, accounting for over a quarter of Asia’s LNG imports.
With energy accounting for roughly half of food production costs and underpinning every stage of the supply chain from farm to table, rising energy prices are pushing up food prices even before fertiliser shortages are realised. The projections are grim. Prolonged disruption could push 45 million more people into food insecurity, with Asia seeing a 24 per cent increase, the largest of any region.
A ceasefire would only offer limited immediate relief: disrupted contracts, supply chains and insurance markets cannot be restored quickly, and there are no international strategic fertiliser reserves to cushion the shock.
Boosting regional fertiliser production is the most immediate response. However, amid surging energy costs and tightening supplies, production plants are scaling back or shutting down, as seen in Pakistan, Bangladesh and India. Turning to other major producers offers only limited relief. China and Russia, two of the world’s largest fertiliser exporters, are restricting exports to prioritise domestic demand.
The timing could not be worse. Across Asia, many farmers entering key planting windows face a stark choice: cut fertiliser use and accept lower yields, delay planting, or shift to less input-intensive crops. The consequences will materialise months later in weaker harvests and tighter supplies.
Such consequences are well documented. When Sri Lanka banned chemical fertiliser imports in 2021, its cultivated area contracted by 26 per cent and yields halved. Rice output fell by around 30 per cent, forcing the country to become a net importer. Food prices skyrocketed a year later, contributing to the uprising that toppled the Rajapaksa government.
Across Asia, rice production exemplifies the broader vulnerabilities. Yields were already stagnating before this crisis. Reduced fertiliser use will widen gaps further, lowering output in rice consumers like the Philippines and Indonesia, while deepening import dependence amid tightening global supply.
Major exporters like India, Vietnam, Thailand, Pakistan and Myanmar are all affected by the ongoing energy and fertiliser disruptions. With only around 10 per cent of global rice production traded internationally, a reduction in output can trigger sharp price spikes. Given that food is already a major budget item for low-income families – over 40 per cent for South Asia – higher prices bring acute risks of poverty and malnutrition.
As currency depreciation raises the cost of dollar-denominated fertiliser imports further, governments face impossible choices: subsidise food, stabilise exchange rates or maintain public services – with limited fiscal room.
The policy response from Asian governments – fertiliser subsidies and emergency import tenders – has been swift but insufficient. None addresses the structural import dependence that made the shock so damaging. Three priorities stand out.
First, governments must prioritise natural gas allocation to fertiliser production. Lessons can be drawn from India which, after initially restricting gas supply to fertiliser plants to 70-75 per cent of normal consumption, has since raised allocations to around 90 per cent.
Second, fertiliser supply diversification must accelerate through precontracted long-term agreements from a broader supplier range to replace emergency spot purchases (the default response during crises) which leave importers exposed to price spikes and supply squeezes when they can least afford them.
Alternative fertiliser systems – bio-fertilisers, nutrient recovery from waste and regenerative inputs – must also be scaled up. The Asean Food, Agriculture and Forestry Sectoral Plan 2026-2030, endorsed last October, reflects growing interest in precisely this area.
Third, regional coordination is essential. When supplies tighten, lower-income countries with limited purchasing power are systematically outbid – a dynamic only collective action can counter. Joint procurement would give smaller economies the scale to negotiate with alternative suppliers, while fast-tracked port and regulatory arrangements enable faster re-routing when primary sources fail.
To this end, the Asean Plus Three Emergency Rice Reserve offers a partial template extendable to fertiliser and other agricultural inputs.
Significant challenges remain. A poor track record in regional cooperation, fiscal constraints that limit how long governments can sustain subsidies before debt pressures force retreat, and the difficulty of getting fertiliser through congested ports to smallholder farmers – with no viable short-term workaround – all compound an outlook already darkened by El Nino threatening rainfall across South and Southeast Asia.
The structural vulnerabilities this crisis has exposed demand a collective response that no government can provide alone. Whether Asia emerges from this with its food systems intact will be determined by decisions made now.