FINANCIAL CHRONICLE – According to Fitch Ratings, nations such as Sri Lanka, which rely heavily on food imports and imported fertilizers, could face escalating cost challenges in agribusiness and food supply chains if a protracted conflict between the US and Iran disrupts fertilizer availability during the crucial planting season.
The ratings agency highlighted that food prices may rise further if the situation regarding fertilizer supply and costs does not improve soon, particularly as several countries in South Asia prepare for their sowing periods.
Fitch noted, “Countries that depend significantly on food imports will be particularly vulnerable if domestic crop yields decline simultaneously with rising global food prices and export limitations from main food-producing nations.” The agency pointed out that the food import reliance for countries like the Philippines, Bangladesh, and Sri Lanka is in the mid-teens percentage-wise, with Mongolia seeing numbers rise into the mid-20s. In the Maldives, this figure is as high as 78.3%, largely due to the tourism sector’s substantial demand.
Fiscal pressures are expected to mount through corporate and household channels if governments opt to subsidize fertilizer and food supplies. In instances where such support is limited, the burden of increased costs will likely fall more heavily on farmers, food manufacturers, and consumers, potentially leading to social unrest.
In a statement released on April 23, 2026, Fitch Ratings observed that if the US-Iran conflict persists, it could result in heightened cost pressures across the agribusiness and food supply sectors in emerging Asian markets. The agency warned that reduced availability of fertilizers and rising prices would inflate production costs, deter optimal fertilizer application, and diminish crop yields, ultimately leading to tighter margins and increased food prices as the year progresses.
The Gulf region stands as a key producer of global fertilizers, with natural gas being a crucial input. Ongoing strife in the region could maintain elevated gas prices and disrupt shipping routes, impacting Asia’s fertilizer supply. Additionally, major Asian fertilizer exporters, such as China, are expected to continue limiting their fertilizer exports at least until mid-year, perpetuating cost pressures for growers and raising the risk of supply disruptions for food producers.
The price of nitrogen-based urea has surged by approximately 50%, reaching around USD 700 per tonne, up from USD 465 prior to the conflict. If these elevated prices persist, farmers may resort to using less fertilizer or reducing their planted area, which could heighten the risk of diminished crop yields and subsequently escalate food prices later in the year.
Domestic agricultural production serves as the primary food source for many emerging Asian countries; thus, any reduction in fertilizer supply could significantly impact planting and yield outcomes. The situation could be particularly dire for nations with high food import dependence, especially if weakened domestic harvests coincide with soaring global food prices and export limitations from traditional suppliers.
Currently, food price pressures remain moderate in many countries, influenced by the delayed effects of energy price shocks. However, the World Food Programme has projected that if the conflict in Iran continues past mid-2026 and oil prices stay above USD 100 a barrel, an additional 9.1 million people in Asia could face acute food insecurity, marking a 24% increase compared to pre-war figures.
Some countries, such as India, have adequate fertilizer reserves for the upcoming planting seasons, thus mitigating immediate cost pressures. Conversely, many emerging Asian markets with weaker supply buffers are likely to experience a more direct impact on farm input expenses, which will eventually translate into consumer food prices.
As the disruption prolongs throughout the planting cycle, the risks to crop production will intensify, varying by country based on the types of crops grown, staple food consumption patterns, and the extent of fertilizer application. A study by Yara International indicated that crop yields could decline by up to 43% in fields lacking nitrogen fertilizer for a year, as observed in a long-term wheat experiment in the UK, with losses exceeding 80% over extended periods without fertilizer.
Although this scenario is not Fitch’s primary forecast, it serves as a reminder of how continuous disruptions could influence planting practices, reduce nutrient application, and weaken harvests, perpetuating high food inflation long after the initial oil price shock subsides.
