DA flags oil shock risks to agriculture

The Department of Agriculture (DA) is keeping a close watch on rising tensions in the Middle East, concerned that a drawn-out conflict could push up production costs and strain the country’s food supply chain.

DA Secretary Francisco P. Tiu Laurel Jr. said the agency is assessing possible spillover effects after a US airstrike on Iran heightened instability in the region. The main concern is the potential impact on global oil prices, which play a critical role in farming and food distribution.

“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,” Tiu Laurel said.

Key flashpoint

A key flashpoint is the Strait of Hormuz, a vital shipping route for a large share of the world’s crude supply. Any disruption in this corridor has historically led to sharp increases in oil prices, with knock-on effects across industries that depend heavily on energy inputs.

For the Philippines, which relies on imported farm inputs and commodities, higher oil prices could translate quickly into rising costs.

Fertilizer prices, particularly nitrogen-based products derived from natural gas, are closely linked to energy markets.

An extended spike in crude prices would likely increase expenses for local farmers already coping with weather-related risks and efforts to stabilize output.

Shipping costs

Shipping costs are another area of concern. More expensive bunker fuel could drive up freight rates, raising the landed cost of imported goods such as wheat and animal feed. This could, in turn, put pressure on the retail prices of bread, poultry and pork, complicating efforts to keep food inflation in check.

“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.”