From fertilizer shock to food crisis: Pakistan’s food security at risk

The ongoing Gulf conflict is widely seen through the prism of rise in oil prices. However, the most serious and immediate risk for South Asia specially for Pakistan lies in the disruption of the interconnected supply chains which are life lines for modern agriculture. Fertilizer is at the center of this disruption, but it is only one part of a much larger problems that could affect food security across South Asia.

A key pressure point is the Strait of Hormuz, a narrow but critical trade route through which about 20 percent of global oil and LNG and roughly one-third (25–35 percent) of global fertilizer shipments pass. Nearly half of globally traded sulphur, a key input for phosphatic fertilizers, also moves through this corridor. The ongoing conflict is restricting these flows; the consequences are rippling across food systems.

The most immediate effect is on fertilizer supply. Countries around the Gulf account for nearly half of global urea exports and a substantial share of ammonia and sulphur trade. Disruptions in LNG supplies have constrained nitrogen fertilizer production, while reduced refining activity has tightened sulphur availability for phosphatic fertilizers. This dual shock is translating into shortages and rising prices, particularly affecting South Asia’s input-dependent agricultural systems.

However, the risks extend well beyond fertilizer. Agriculture in Pakistan is highly energy-intensive. Diesel powers tractors and tube wells, while electricity sustains irrigation. Rising fuel prices are increasing the cost of irrigation, land preparation, and harvesting, especially in groundwater-dependent regions where higher diesel costs directly reduce water use and yields.

Food trade and logistics are also under stress. Disruptions in maritime routes have increased freight costs, insurance premiums, and delays. Pakistan relies on imports for commodities such as edible oil, pulses, and occasionally wheat. Higher transport costs are feeding into domestic prices while straining foreign exchange reserves.

The financial channel is further amplifying the shock. Exchange rate pressures are making fertilizer, fuel, and food imports more expensive, adding to inflation and eroding purchasing power—particularly for low-income households that spend a large share of their income on food.

The timing is particularly concerning. The disruption coincides with key Kharif crop decisions. Fertilizer shortages, combined with rising energy and transport costs, may lead farmers to reduce input use or cultivated area, with effects likely to emerge later as lower yields and tighter food supplies.

A useful way to quantify this risk is through fertilizer demand and production elasticities. Empirical evidence for South Asia suggests that the price elasticity of fertilizer demand ranges between -0.2 and -0.4, while output elasticity in cereal production lies between 0.3 and 0.5. Applying these parameters, a 30–50 percent increase in fertilizer prices could reduce usage by 6–20 percent in Pakistan, leading to yield declines of 2–10 percent for major crops such as wheat and rice, with sharper reductions possible in fertilizer-intensive regions.

The greater concern is how this modest production shocks amplify across the system. A 2–10 percent drop in yields can translate into a 5–30 percent increase in staple food prices due to highly inelastic demand. Such increases have significant welfare implications: a 10–15 percent rise in food prices could push 5–10 million people towards poverty or food insecurity, while a more severe 20–30pc increase could affect 12–20 million people. At the same time, calorie intake among vulnerable households may decline by 3–12 percent, pushing many below minimum nutritional requirements.

For a country already close to food security margins, even a 5 percent reduction in grain output is significant. It can shift markets from surplus to deficit, increase reliance on imports, and accelerate food inflation.

Pakistan’s response must therefore be both immediate and strategic. In the short term, securing fertilizer supply is critical, including diversifying import sources for LNG, sulphur, and phosphates, and prioritizing gas allocation to domestic fertilizer plants. Targeted subsidies can protect small farmers, while managing irrigation energy costs can prevent sharp reductions in input use. Maintaining open import channels and strengthening strategic reserves of wheat and fertilizer inputs will also be crucial.

Over the medium term, Pakistan must reduce structural dependence on imported inputs. Improving fertilizer-use efficiency through soil testing and precision application, and investing in alternative energy sources such as solar-powered irrigation, can reduce exposure to global shocks.

The central lesson is clear: food security can no longer be treated as a purely agricultural issue. It is deeply intertwined with energy security, trade routes, and geopolitical stability. What appears today as a distant conflict may quickly transmit through supply chains into domestic markets—showing up in higher food prices, tighter availability, and increasing pressure on household food security in the months ahead.

Copyright Business Recorder, 2026