- Shipping disruptions in the Middle East have significantly reduced the flow of essential energy and fertiliser supplies to Asia, threatening the region’s agricultural productivity.
- Rising input costs of 50 to 80 per cent, combined with stagnant output prices, are forcing many Asian farmers to reconsider their planting decisions.
- Major buyers in the Gulf have drastically reduced imports of Asian rice, meat, and dairy, leading to weakened demand for Asian agricultural exports.
Shipping disruptions linked to the Middle East conflict have sharply reduced traffic through the Strait of Hormuz, a crucial route for energy and fertiliser supplies.
The strain is impacting Asia’s agriculture cycle at its core, said Máximo Torero Cullen, chief economist of the Food and Agriculture Organisation (FAO) in recent op-ed.
It was published by FAO during the recent 38th Session of the FAO Regional Conference for Asia and the Pacific (APRC 38) held on 20 to 24 April in Brunei Darussalam.
While shipments of important agricultural inputs stall, the Gulf markets have scaled back food imports, weakening demand for agricultural exports.
“Gulf economies, among the largest buyers of Asian rice, meat, and dairy, have sharply reduced their purchases. In one stroke, Asian farmers are losing both the inputs they depend on and the markets they serve. The adjustment is already underway across planting decisions from Punjab to the Mekong,” said Torero.
While we have not felt the effects yet, Torero expects that data will arrive later in the year to confirm the shortages.
“By then, the outcome will already be set. The relevant data is available now. Ships are not moving. Inputs are not arriving. Farmers are adjusting. The next harvest is being decided today.”
Farmers backed into a corner
Torero highlighted how the impact is already visible among major agricultural exporters and the region’s farmers.
“Vietnam, the world’s second-largest rice exporter, is cutting production as energy costs compress margins. Thailand and Bangladesh face similar pressures. Across the region, farmers face the same calculation: input costs are up by 50 to 80 percent while output prices remain subdued. Many farmers in Asia are no longer breaking even.”
Faced with these conditions, farmers are responding in ways that reduce overall food supply.
“It is easy to see what follows. Some farmers will reduce application rates and accept lower yields. Others will move toward crops that require fewer inputs. Elevated energy prices are also increasing pressure to expand biofuel production, redirecting land from food to corn and soy for ethanol and biodiesel,” said Torero.
As farmers make their adjustments, they are shaping supply well into the future.
“The problem is that each response reduces the food supply. Decisions taken during the 2026 planting season determine the 2027 harvest. Once made, they cannot be reversed,” said Torero.
He added: “We can still help limit the damage of the Gulf crisis as it applies to planting decisions and yields. Among other things, the outcome will turn on whether land remains in food production and whether farmers retain access to the inputs that allow it to endure. But time is short and the scope for adjustment is narrowing with each passing week.”
Furthermore, shipping insurance costs have also surged, rising from about 0.25 per cent of a vessel’s hull value to between 7 and 10 per cent, he highlighted.
“These costs persist until stability is sustained, not declared. Fertiliser shipments missed in March and April cannot be delivered into planting windows that have already closed. Supply chains built over years will take months to restore. The result is straightforward: less planted area now and lower output later.”
A hidden pressure point
The crisis is also affecting farm households indirectly through falling remittances from workers in the Gulf.
These remittances account for more than 8 per cent of GDP in Nepal, 5.6 per cent in Pakistan, 2.8 per cent in Bangladesh, and 2.5 per cent in the Philippines.
“That income finances seeds, covers input costs, and sustains smallholder investment. A slowdown in Gulf economies reduces those transfers just as input prices rise and export revenues fall. For farmers already absorbing higher input costs and falling export revenues, the loss of remittance income translates directly into a decision to plant less,” said Torero.
Unprecedented challenges
Torero stressed that there was no easy fix for the current challenges. Unlike the Ukraine War, it would be not enough to find alternative sources and suppliers
“The 2026 Middle East conflict is different in kind: an upstream input shock combined with a demand collapse. There is no alternative supplier for the fertilisers and energy flowing through Hormuz at the volumes the world requires, and the Gulf buyers who absorb Asian food exports cannot simply be replaced.”
He urged Asia’s governments to act and limit the damage.
“Carefully regulating biofuel mandates would return land to food production at a moment when every hectare diverted to fuel is a hectare removed from the food supply. International financial institutions and donor governments can move quickly to fund access to fertiliser before planting windows close.
“These farmers have no reserves, no credit lines, and no capacity to absorb input costs that have risen 50 to 80 per cent without direct support. These measures act directly and do not depend on diplomatic resolution.”
