Mideast tensions could increase costs for China's agricultural sector, expert says

Escalating tensions in the Middle East could increase costs for China's agricultural sector by pushing up global energy and fertilizer prices, although domestic food supplies remain stable, a Chinese agricultural expert said.

The conflict's impact on agriculture is expected to come mainly through disruptions to fertilizer production, energy transportation and global commodity prices, Li Guoxiang, a researcher at the Chinese Academy of Social Sciences' Institute of Rural Development, said.

About 20 percent of the world's fertilizers are produced in the Gulf region, and roughly 46 percent of global urea supply originates there, Li said.

If shipping through the Strait of Hormuz is disrupted and oil prices surge, fertilizer plants that rely on natural gas could face shutdowns or production cuts.

"Reduced fertilizer supply would likely push prices higher, potentially raising farming costs or reducing fertilizer use, which could affect crop yields and food prices," he said.

Li said domestic grain prices saw a brief rebound after the initial escalation of the Middle East conflict, while the prices of fertilizers and diesel fuel also rose.

However, China has a strong domestic fertilizer industry and maintains a high level of self-sufficiency, which has helped stabilize prices under government regulation.

"Overall, grain and fertilizer markets have gradually returned to stability, which supports the prospects for another good harvest this year," Li said.

Still, rising energy prices could indirectly increase agricultural production and logistics costs in China.

The country's grain sector is highly mechanized, and large volumes of grain need to be transported between major producing regions and consumption centers. Higher fuel costs could therefore raise both farming and transport expenses, potentially affecting the cost of grain supply later in the year.

Li said the duration and intensity of the Middle East conflict remain uncertain, underscoring the need for stronger monitoring and early warning systems.

"To avoid unnecessary panic, it is important to improve market monitoring and guide public expectations," Li said, adding that authorities should also guard against misinformation or exaggerated claims about global food shortages.

If agricultural input costs rise significantly, the government could consider temporary subsidies for farmers, such as one-off support for fertilizer or diesel expenses, to offset higher planting costs and ensure farmers' incentives to grow grain, he added.