Philippines most at risk of fertilizer supply shock in Southeast Asia

THE PHILIPPINES faces the highest exposure to fertilizer price and supply risks in Southeast Asia due to its heavy reliance on imports and vulnerability to supply disruptions, according to Fitch Solutions unit BMI.

In a report, BMI said the risk of reduced fertilizer application across the region is rising as global prices surge amid the ongoing war in the Middle East, with the Philippines particularly at risk due to limited domestic production capacity.

“The Philippines is more fundamentally exposed to an extended disruption to nitrogenous fertilizer supplies given its high reliance on imports,” the think tank said.

BMI said delays in fertilizer shipments could coincide with key planting windows in the Philippines, posing downside risks to crop yields.

“With approximately 75% of corn plantings occurring between April and May and around 60% of rice plantings taking place from March to May, delay in fertilizer arrivals past key application windows could pose significant downside risks to the upcoming crop,” it said.

BMI said global urea prices have already surged following the escalation of tensions in late February. The US Gulf New Orleans granular urea spot index had risen by 40.4% to $660 per metric ton as of March 20, reflecting expectations of tighter global supply.

Locally, data from the Department of Agriculture (DA) showed that fertilizer prices have also climbed sharply.

The average price of prilled urea rose by 17.15% to P1,948.01 per bag last week from P1,662.84 at the end of December, while granular urea increased by 18.88% to P1,969.03 from P1,656.28.

Ammonium sulfate prices likewise went up by 14.48% to P937.33 per bag from P818.80 over the same period.

BMI warned that sustained high prices for nitrogen-based fertilizers could lead farmers to cut back on usage, weighing on yields for the 2026-2027 crop cycle.

The DA earlier flagged potential declines in agricultural output under a prolonged high oil price scenario, which feeds into fertilizer costs.

RICE OUTPUT MAY DROP
At a Senate hearing on Tuesday, the DA said that if crude oil prices reach a 180-day average of $200 per barrel, second-semester rice output could fall by 3.81% to 10.7 million metric tons (MT) from the initial 11.12 million MT projection.

Corn production could also fall by 4.58% to 3.26 million MT from 3.42 million MT previously projected, while lowland vegetable output may drop by 9.92% to 737,625 MT from 818,856 MT.

Highland vegetable supply could see a sharper 20% decline to 311,230 MT from a prewar projection of 389,037 MT.

Under the same scenario, onion supply is also projected to slide by 14.02% to 359,419 MT from a prewar estimate of 418,025.68 MT.

In an earlier statement, the DA said the government is negotiating with China, Russia, and India to ensure steady delivery of petroleum-based inputs should the supply outlook from the Gulf becomes even more uncertain.

Meanwhile, BMI said other Southeast Asian countries such as Indonesia, Malaysia, and Vietnam are relatively insulated from supply shocks due to strong domestic production of nitrogen-based fertilizers and access to natural gas feedstock.

However, BMI said policy decisions, such as whether to prioritize domestic demand or exports, could still affect availability in these markets.

Thailand, while also reliant on imports, has sufficient urea stockpiles to meet demand through August 2026, providing a buffer against near-term disruptions, BMI said. — Vonn Andrei E. Villamiel