Fuel shortages linked to the Iran war threaten rice production in Southeast Asia
Surging fuel and fertiliser costs tied to the Iran war are forcing rice farmers in Southeast Asia to delay harvesting and reconsider planting decisions for the next crop.
The war linked to Iran and the disruption around the Strait of Hormuz are starting to hit rice production directly in Southeast Asia. Bloomberg, as cited by The Economic Times, reported that harvest-ready fields are being left idle and some farmers are considering skipping the next planting cycle because fuel and fertiliser costs have surged too far.
The pressure is building in one of the world’s most important food-producing regions. Tens of millions of smallholders across Southeast Asia are struggling to secure affordable crop nutrients and the diesel needed to run tractors, irrigation pumps and rice planters. In Thailand, some growers are already leaving mature rice in the field because the cost of harvesting has risen too sharply. That matters because rice remains a staple food for more than half of the world’s population.
One of the main causes is the near closure of the Strait of Hormuz despite a temporary ceasefire after the six-week war. The route is critical for shipments of both fuel and fertiliser, and Asia is especially exposed to those disruptions. Patrick Davenport, director and co-founder of Cambodia’s BRM Agro, said there is widespread panic among farmers and that about a tenth of the roughly 2,000 farmers his company works with have said they will not plant unless they can secure a guaranteed return for the next crop.
Rice prices, however, are not offsetting the cost shock. Benchmark Thai white rice 5% broken fell to a decade low in late October and spent most of last month below $400 a tonne. FAO chief economist Máximo Torero warned that if Hormuz remains blocked for another 20 to 30 days, food availability could begin to tighten in the second half of the year because the shortage of inputs cannot be resolved without normal vessel traffic.
In the Philippines, the world’s biggest rice importer as well as a major producer, paddy output could fall by at least 10% this year, according to Raul Montemayor of the Federation of Free Farmers Cooperatives. He said that would amount to about 2 million tonnes of lost rice against projected national output of 20.3 million tonnes, with the reduction likely to be felt in the September-October harvest season.
Pressure is also visible elsewhere in the region. In Vietnam’s Mekong Delta, farmers harvesting the main paddy crop are barely breaking even and some are considering cutting back from three crops a year to two. In Thailand, a March 31 Kasikorn Research Center report estimated that the March-April dry-season crop could fall by around 19% from a year earlier. Some farms are switching from rice to corn, while BRM is accelerating bio-organic fertiliser production and looking for electric tractors and solar-powered pumps, but many growers still say they have little option other than planting again and absorbing the risk of losses.