The ongoing geopolitical conflict in the Middle East has exposed the fragility of global fertilizer supply chains, with direct consequences for Philippine food security. World urea prices nearly doubled between February and April 2026, a critical shock for the Philippines, which imports about 90% of its fertilizer requirement and where rice remains central to both consumption and production. The disruption is unfolding alongside a developing El Niño (79% probability for June-August 2026, persisting into early 2027), compounding the risk of a sharp decline in palay production. With the wet planting season already underway in May-June 2026, the policy window for effective intervention is narrow.
The econometric results confirm that the fertilizer supply shock will transmit gradually but significantly to domestic urea prices, palay production, farmgate prices, and ultimately retail rice prices, with full adjustment unfolding over two to three years. Under the simulated scenarios, prices of regular-milled rice could increase by 9.1% to 19.4%, or roughly P5.0 to P10.6 per kilogram in nominal terms. The effects are clearly regressive: the poorest households could face an additional P490.8 in monthly rice expenditures, equivalent to as much as 8.0% of their average monthly food expenditure. These estimates are conservative lower bounds. They capture only the fertilizer channel and exclude amplifying pressures from the concurrent oil price shock, which raises transport, irrigation, and logistics costs, El Niño-driven yield losses, spillovers to corn, feed, and meat prices, and asymmetric retailer pricing behavior.
Averting a food crisis will require a cohesive, carefully sequenced policy response. In the immediate term, the priority is to protect the wet-season planting cycle through diversified emergency procurement, targeted and timely support to farmers, balanced fertilization programs, and adequate rice buffer stocks. Over the medium and long term, building institutional capacity for fertilizer supply management and sustained investments in irrigation, logistics, and agricultural modernization are essential. Equally critical is avoiding policy missteps, such as price caps, untargeted subsidies, and broad legislated wage hikes, that risk amplifying rather than easing inflationary pressures.