West Asia Conflict and India’s Food Security

Why in News?

The ongoing geopolitical tensions in West Asia, particularly involving Israel, Iran, and the United States, are increasingly generating far-reaching economic consequences.

What are the strategic importance of west Asia for India?

• Crude oil – Nearly 85–90% of India’s crude oil requirements are met through imports, with about 40% transiting through the Strait of Hormuz.
• LPG – Additionally, a significant share of liquefied petroleum gas (LPG) and fertiliser inputs originates from this region.
• This dependence creates a direct vulnerability: any disruption in energy supply chains translates into higher input costs across sectors.
• Agriculture – It relies heavily on fuel, fertilisers, and logistics, and such disruptions can significantly affect productivity and food prices.
• Fertiliser imports – The Gulf region plays a central role in India’s fertiliser supply chain.
• Countries such as Saudi Arabia, Oman, and Qatar account for a major share of imports.
  • Around 63% of India’s urea imports originate from Gulf nations
  • Approximately 32% of DAP imports come from this region
• India has entered long-term agreements with Saudi Arabia to secure DAP supplies
• Additionally, India imports significant quantities of potash and rock phosphate, with domestic production meeting only a fraction of demand.
• Thus, any disruption in Gulf supply routes—due to conflict or shipping constraints—directly impacts fertiliser availability in India.
• Fertiliser supply chains under stress – A key channel through which geopolitical tensions affect food security is fertiliser availability.
• Fertiliser production, especially urea, is closely linked to natural gas availability.
• Disruptions in gas supply from Gulf countries increase production costs and reduce global supply.
• Recent developments illustrate this challenge.
• Production disruptions in the United Arab Emirates and shutdowns of major facilities such as those operated by Qatar Fertiliser Company have contributed to a sharp rise in fertiliser prices.
• Urea prices have reportedly increased by 30–40% since the onset of the conflict.
• Globally, even advanced economies like the United States have faced fertiliser shortages, indicating the scale of disruption.
• For India, which is heavily dependent on fertiliser imports, the implications are far more severe.
• India’s fertiliser dependency – India is the world’s second-largest consumer and third-largest producer of fertilisers.
• However, domestic production is insufficient to meet demand. In 2023–24, India consumed about 601 lakh metric tonnes (LMT) of fertilisers, of which approximately 177 LMT were imported.
• Import dependence varies across nutrients:
  • DAP (Di-Ammonium Phosphate) – Domestic production meets only about 40% of demand.
  • MOP (Muriate of Potash) – Almost 100% imported.
  • Urea – Significant imports despite substantial domestic production.
• Projections indicate that fertiliser imports could exceed 22 million tonnes in 2025–26, reflecting rising demand and limited domestic capacity.
• This high level of dependence makes India vulnerable to global supply disruptions and price volatility.

How rising fertiliser prices and shortages create multiple challenges?

• Increased input costs – Farmers face higher costs for fertilisers, diesel, and transportation.
• Reduced fertiliser usage – To manage costs, farmers may reduce fertiliser application, leading to lower yields.
• Declining agricultural productivity – Lower input use directly affects crop output and food availability.
• Rising food inflation – Higher production costs are passed on to consumers, increasing food prices.

In a country where agriculture supports nearly 46% of the population and contributes about 16% to GDP, these effects have wide-ranging economic and social implications.

What are the other impacts?

• Impact on farmers and rural economy – The burden of rising input costs falls disproportionately on farmers.
• Climate change has already increased production risks, while rising diesel prices have added to operational expenses.
• In this context, higher fertiliser prices can push farmers into deeper financial distress.
• Many are forced to either absorb losses or pass on costs, both of which have adverse consequences.
• The situation is further complicated by rising fertiliser subsidy requirements.
• Government expenditure on fertiliser subsidies has increased significantly, reflecting efforts to shield farmers from global price shocks.
• However, this also puts pressure on fiscal resources.
• Disruptions to agricultural trade – Geopolitical tensions have also affected agricultural exports.
• Shipping disruptions and rising freight costs have made it difficult to transport goods to international markets.
• For instance:
  • Coconut exports have declined, leading to a sharp fall in domestic prices.
  • Basmati rice shipments to Gulf countries are facing challenges.
  • Exports of tea and spices are being disrupted.
• These developments hurt farmers’ incomes and reduce foreign exchange earnings.
• Export-oriented crops are particularly vulnerable, as they depend on stable international demand and logistics.
• Food security concerns – The combined impact of rising input costs, reduced productivity, and disrupted trade raises serious concerns about food security.
• Key risks include:
  • Lower agricultural output due to reduced fertiliser use.
  • Higher food prices, affecting affordability for consumers.
  • Income losses for farmers, weakening rural demand.
  • Supply chain disruptions, affecting availability of essential commodities.
• In the long term, these factors could undermine India’s food security framework, especially if geopolitical instability persists.

What are the policy imperatives for India?

• Diversification of import sources – Reducing dependence on a single region by sourcing fertilisers and energy from multiple countries can enhance resilience.
• Boosting domestic production – Investing in domestic fertiliser production, especially for critical inputs like DAP and potash, can reduce vulnerability.
• Promoting sustainable agriculture – Encouraging organic farming, bio-fertilisers, and efficient nutrient management can reduce reliance on chemical fertilisers.
• Strengthening strategic reserves – Maintaining buffer stocks of fertilisers and essential commodities can help manage short-term disruptions.
• Enhancing supply chain resilience – Improving logistics infrastructure and exploring alternative trade routes can reduce the impact of shipping disruptions.

What lies ahead?

• The ongoing tensions in West Asia highlight the deep interconnections between geopolitics, energy security, and food security.
• For India, heavy dependence on imported fertilisers and energy creates significant vulnerabilities that are exposed during global crises.
• Ensuring food security in such a context requires not only short-term policy responses but also long-term structural reforms.
• By diversifying supply chains, strengthening domestic production, and promoting sustainable practices, India can build resilience against external shocks.
• Ultimately, safeguarding agriculture is essential not just for economic stability but also for the well-being of millions who depend on it for their livelihoods.

Reference

Down to Earth| West Asia Conflict and Food Security