Asia faces a compounding threat to its food supply due to a strong El Niño, the war in Ukraine, and escalating geopolitical tensions in the Middle East, according to analysts. The El Niño phenomenon is expected to bring prolonged dry spells to South and Southeast Asia, weakening the summer monsoon and threatening rain-fed crops like rice and corn. This could lead to significant reductions in crop yields, such as the 15 million tonnes of rice lost in Southeast Asia during the 2015-2016 El Niño, representing about 7% of total output. Countries like Vietnam, the Philippines, and Malaysia are already preparing for potential drops in output, while India has seen rice sowing down by approximately 1% this season due to rainfall deficits. Overall, India's output is not expected to drop by more than 5% due to its robust cereal production and input subsidies.
The Middle East crisis is further exacerbating the situation by driving up energy and fertilizer costs. The region is a major exporter of crop nutrients, and disruptions in trade routes, particularly through critical chokepoints, have led to significant price increases. For instance, urea prices more than doubled from around $400 a tonne to over $850 a tonne before easing. The World Bank projects fertilizer prices to rise 38% in 2026. This, combined with higher diesel prices—up over 50% in the US year-over-year to $5.60 per gallon as of late August—will substantially increase the cost of agricultural production, transportation, and processing across Asia.
The war in Ukraine continues to disrupt global grain supplies, particularly wheat, with prices up roughly 25% since January. This combination of a fertilizer shock, a fuel shock, and a grain supply shock, alongside the weather-related El Niño, creates a "four shocks compounding at once" scenario. Analysts from market intelligence firm Expana anticipate firmer food prices over the next 12 to 18 months, leading to concerns about heightened inflation and food insecurity, especially in developing Asian nations where smallholder farmers operate on thin margins.
Inflation across the Asian region is already rising, with the ADB noting an increase from 2.9% in January to 4.1% in May due to global energy prices. The ADB forecasts regional inflation to reach 4.3% by the end of 2026, up from 3% in 2025. This environment could lead to trade protectionism, with countries like India, Indonesia, and Vietnam potentially resorting to export restrictions to stabilize domestic food prices. Such measures, while aiming to control local prices, could trigger ripple effects and further increase prices for food-importing nations, increasing the risk of social unrest and food riots, particularly in vulnerable economies like Bhutan, Nepal, and Sri Lanka.
The World Meteorological Organization warns that the current El Niño could be one of the strongest in over 70 years and last until at least February 2027. This prolonged and intense event, coupled with geopolitical instability, heightens the risk of natural disasters and disrupts agricultural production globally. The combination could fuel global inflation and lead to interest rates remaining higher for longer. Energy prices are also expected to rise due to reduced hydropower availability and increased demand for cooling, especially in Asia, where a significant portion of the world's population will experience higher temperatures.
