Fertiliser shortages threaten plantation sector output, PA warns

• Says plantations not yet fully recovered from calamitous 2021 ban when Mideast war began

The Planters’ Association of Ceylon (PA), the apex body of Sri Lanka’s plantation industry, yesterday expressed growing concern over rising prices and limited availability of fertiliser amid the escalation of the crisis in the Middle East. 

In a statement, the PA said that with the closure of the Strait of Hormuz, shipping traffic through the region is reported to have dropped by 90%. Given that an estimated one-third of global trade in raw materials for production of fertiliser flows through the Strait, these interruptions are already disrupting fertiliser supply chains around the world. 

After Russia, Egypt, and Saudi Arabia, Iran is the fourth-largest global supplier of urea, the most widely used fertiliser ingredient.

Given the dire implications on domestic agricultural production, the PA commended the Government’s primary focus on safeguarding national food security, and welcomed the fertiliser subsidy for additional crops being increased up to Rs. 18,000. Such measures are part of a broader effort to support the agricultural sector during this period of volatility. 

However, the PA cautioned that the implications of another fertiliser crisis extend well beyond direct agricultural impact. Importantly, the next two to four months will have a significant impact on the annual crop yields of the industry. It warned that these dynamics could significantly affect the Balance of Payments (BOP), inflation, and purchasing power for critical resources like fuel. 

The current fertiliser crisis echoes the challenges faced during the 2021 ban, which caused a calamity in the plantation sector. Even after the ban was lifted, it took four years to recover, and just as progress was being made, the current fertiliser issue has emerged, the PA said.

The PA also highlighted the stress on Regional Plantation Companies (RPCs) and smallholders in particular, noting that the industry was already under significant pressure as a result of rising cost of production. 

Moreover, the PA noted that only a limited number of companies are authorised to distribute fertiliser, and called on the Government to mitigate these challenges. 

Throughout the COVID-19 pandemic, the plantation sector played a crucial role in generating foreign exchange to support the economy, and it is essential that the industry continues to contribute to macroeconomic stability during this crisis.

In a recent news article, University of Peradeniya Senior Professor Buddhi Marambe noted that with paddy cultivation alone needing approximately 98,800 metric tons for the Yala season, current stocks cover only about 60% of the total national requirement.

The PA also emphasised the entire plantation industry’s vital role in upholding the economy, particularly in generating foreign exchange via export revenue and in supporting rural livelihoods. 

According to an analysis published on 15 March by the UN Food and Agriculture Organisation (FAO) Chief Economist’s Office, the Gulf region accounts for roughly 30 to 35% of global urea exports—supply chains that have been severely disrupted since the conflict began.

The study found that the farming systems most exposed are those combining high fertiliser application rates with significant dependence on Gulf supply chains, a profile that applies across South Asia, East Africa, and parts of Latin America. The FAO analysis projects global fertiliser prices averaging 15 to 20% higher across the first half of 2026 if the disruptions persist, with yield consequences materialising in harvests later in the year and into 2027.

Data show world urea prices rose from $ 460 to $ 690 per metric ton between the end of February and 30 March, and the country’s primary supplier, China, has simultaneously halted exports to protect its own domestic supply. The Government it is understood is now pursuing discussions with Russia and India to mitigate the impacts of the crisis. These countries will, however, have their own requirements as the first priority in terms of achieving food security.

Agriculture Deputy Minister Namal Karunaratne announced that a shipment of 25,000 metric tons of urea is expected this week. However, agricultural experts have warned that this will only meet a small fraction of the sector’s requirements, the PA said.