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Prolonged military hostilities in the Middle East, the Philippine’s main source of crude oil, will eventually affect local agriculture as logistics costs increase, the Department of Agriculture warned
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Impact will be on petroleum-based fertilizers, freight costs, and fuel used for farm machinery and fishing vessels
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Higher bunker fuel costs can also raise shipping rates, increasing the landed cost of imported commodities such as wheat and animal feed, complicating efforts to contain food inflation
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Agriculture secretary Francisco P. Tiu Laurel Jr. said they are now “looking at ways to manage the impact on our food systems and on the country’s food security”
Prolonged military hostilities in the Middle East, the Philippine’s main source of crude oil, will eventually affect local agriculture as logistics costs increase, the Department of Agriculture (DA) warned as it closely monitors developments in the region following the US and Israel’s airstrike on Iran on February 28.
“We are concerned about the intensifying conflict between the US and Iran as it might increase oil prices over an extended period, affecting petroleum-based fertilizers, freight costs, and the fuel that powers the machinery our farmers use and the boats our fishermen rely on,” Agriculture secretary Francisco P. Tiu Laurel Jr. said in a statement.
At the center of concern is the Strait of Hormuz, a narrow but critical waterway through which a significant portion of the world’s oil supply passes, DA noted.
The agency said any disruption along this corridor has historically triggered spikes in global crude prices, tighten energy markets, and amplifying volatility across commodity supply chains.
For an import dependent agricultural system like the Philippines, DA said the transmission channels are immediate.
Fertilizer inputs are closely tied to energy prices, particularly nitrogen-based products derived from natural gas. A sustained rally in oil prices would likely drive up farm input costs at a time when producers are striving to stabilize output and manage weather related risks.
Freight presents another pressure point, DA said.
Higher bunker fuel costs can raise shipping rates, increasing the landed cost of imported commodities such as wheat and animal feed. This, in turn, feeds into retail prices of bread, poultry, and pork, complicating efforts to contain food inflation.
Association of International Shipping Lines, Inc. earlier said the escalating conflict in the Middle East will prolong transit times of vessels and lead to additional costs, with shipping lines needing to traverse longer routes and suspend bookings for the Middle East.
“We have seen this during past oil shocks, and we are now looking at ways to manage the impact on our food systems and on the country’s food security,” Tiu Laurel said. “We have to balance fiscal prudence with the welfare of our food producers and consumers.”
While markets have yet to fully price in a worst-case scenario, DA said its “vigilance underscores a broader reality: in an interconnected global food system, distant conflicts can swiftly reshape domestic cost structures and test supply chain resilience.”
READ: Global logistics face major disruption as Middle East crisis escalates
