Rising tensions in the Middle East could drive up costs for China's agricultural sector by hiking global energy and fertilizer prices, although the country's domestic food supply remains stable, according to officials and industry experts.
The impact of the conflict is expected to be transmitted largely through disruptions to fertilizer production, energy transportation and global commodity markets, said Li Guoxiang, a researcher at the Chinese Academy of Social Sciences' Rural Development Institute.
About one-fifth of the world's fertilizers are produced in the Gulf region, with roughly 46 percent of global urea supply originating there, Li said. Any disruption to shipping through the Strait of Hormuz, coupled with a surge in oil prices, could force fertilizer plants reliant on natural gas to cut production or shut down.
Reduced supply would likely push fertilizer prices higher, increasing farming costs or prompting reduced usage, potentially affecting crop yields and food prices, Li added.
China has already seen some short-term market reactions.
