DA sees lower farming costs as Hormuz reopens

MANILA, Philippines – The reopening of the Strait of Hormuz is expected to lower farming costs and ease pressure on the Philippine agriculture sector, the Department of Agriculture (DA) said.

After months of conflict, the United States and Iran reached a deal to end the Middle East war and reopen the Strait of Hormuz, a critical global shipping route. Both will sign the agreement on Friday in Switzerland.

READ: US, Iran reach deal to end war, reopen Hormuz

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“The reopening of the Strait of Hormuz will greatly help reduce the cost of inputs in the production and transport of agricultural commodities, especially now as we prepare for a new rice planting season,” Agriculture Secretary Francisco Tiu Laurel Jr. said in a statement on Tuesday.

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“The expected cost reduction will be one concern less and will allow us to focus on El Niño,” he added.

Tiu Laurel said the development will facilitate trade between the Philippines and the Middle East, a major export market for locally produced food products.

Fresh pineapples and Cavendish bananas are the main Philippine export products to the Middle East, along with processed goods such as canned tuna, sardines, coconut products and snack foods.

Since the Middle East conflict erupted in late February, the DA noted that fuel, fertilizer and freight costs have surged, exerting upward pressure on food prices.

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For instance, the price of urea, the most commonly used fertilizer, averaged P2,629.35 per 50-kilogram bag as of June 1 to 5, rising by as much as 53 percent compared to P1,711.58 per 50-kg bag from Feb. 23 to 27, data from the Fertilizer and Pesticide Authority showed.

The DA said it had prepared a worst-case scenario that assumed a prolonged closure of the strategic waterway, which could increase production costs and food prices as well as reduce domestic farm output.

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“The reopening removes a major external risk just as the country gears up for the next planting cycle and braces for possible weather-related challenges,” it added.

The latest forecast from the Philippine Atmospheric, Geophysical, and Astronomical Services Administration (Pagasa) showed an over 80 percent probability that a full-blown El Niño event will develop and will likely persist until early 2027.

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The agency had projected that a prolonged dry spell could slash local rice production by approximately 700,000 metric tons, on top of an additional 500,000 to 600,000 MT of losses due to typhoons. /pai INQ