Amidst the ongoing crisis in the Gulf region, disruptions caused by fuel shortages and input constraints are spreading across Sri Lanka’s agricultural value chain and affecting food security.

Speaking to The Sunday Morning Business, Sri Lanka Agripreneurs’ Forum (SLAF) Honorary Secretary Dr. Selvanathan Anojan noted that the country’s agricultural exports were already facing pressure amid current global disruptions, specifically the ongoing Red Sea shipping crisis and heightened geopolitical tensions in the Middle East. 

He explained that Sri Lanka exported a considerably large share of fresh produce along with semi-processed and processed food to the Middle East, but that current conditions had led to exports falling sharply, with shipments either halted or continuing only through essential channels. As a result, he said the export impact was immediate and significant.

Dr. Anojan further highlighted that challenges on the input side added more risk. He pointed out that a large share of global fertiliser and agrochemical transportation passed through shipping routes in the region, estimated at around 60% and in some cases as high as 80%. He explained that while export disruptions were felt immediately, shortages in inputs such as fertilisers could create longer-term consequences, specifically affecting grassroots-level farmers. 

Adding to this, Sri Lanka’s ability to open Letters of Credit (LCs) for agrochemical imports remains constrained by foreign exchange availability, adding another layer of uncertainty to procurement.

Referring to concerns already emerging ahead of the Maha season, Dr. Anojan noted that fertiliser availability was becoming a key issue, with some farmers already raising concerns. Therefore, he warned that Sri Lanka may need to explore other procurement strategies. 

Sri Lanka, as a smaller market, may find it difficult to independently secure shipments from source. Accordingly, he suggested that the country may need to work more closely with India to procure fertiliser, given limitations in economies of scale, financial strength, and geopolitical leverage. He added that while Government-to-Government (G2G) arrangements could offer more stability, private sector importers, who supply fertiliser for export-oriented crops such as tea and high-value vegetables, faced similar supply chain disruptions and may require parallel support.

“We must focus on securing fertiliser, while securing direct access to any other channels if possible would remain the ideal scenario. However, if the situation does not stabilise soon, Sri Lanka may have to manage prolonged disruptions.”

In addition to geopolitical tensions, Dr. Anojan observed that weather forecasts predicting a potential drought in May could complicate agricultural output further. This creates a compounding risk – if the Yala season is affected by drought, and the subsequent Maha season is compromised by input shortages, Sri Lanka could face back-to-back crop failures that strain both domestic food security and exportable surpluses.

Dr. Anojan highlighted that fertiliser procurement must begin months in advance, noting that the full process, from procurement to shipment, unloading, and distribution to farmers, could take 4–5 months. He said that fertilisers must ideally be available by late September or early October for the Maha season, adding that delays in procurement could significantly disrupt cultivation cycles.

“Then again, rerouting shipments through other countries may also increase costs due to additional intermediaries, which could ultimately lead to higher fertiliser prices,” he said. For fresh produce exports, however, the bigger constraint is time, as rerouting around the Cape of Good Hope adds 10–14 days to shipping, making many perishable items commercially unviable regardless of freight cost.

Medium- to long-term impact

Looking at medium- to long-term implications, Dr. Anojan explained that competing countries with access to technology or resources may capitalise on supply disruptions and enter some of these export markets. 

Furthermore, with Sri Lanka having little less than two million hectares of arable land, with most land already allocated for cultivation, he highlighted that it left limited room for expansion, which could affect competitiveness over time. According to Food and Agriculture Organization data, this places Sri Lanka’s net sown area at approximately 1.8 million hectares, highlighting the structural constraint on scaling up production.

“Moreover, Sri Lanka is not relatively best poised in terms of logistical cost. Also, our key export markets are largely within tropical regions, which limits diversification opportunities. As a result, if buyers begin sourcing from other markets during supply disruptions, Sri Lanka may find it difficult to regain lost market share even after conditions stabilise,” he said.

However, Dr. Anojan also noted potential opportunities, including exploring new markets (not entirely new but at scale) such as Japan, Australia, Europe, and the US, specifically for high-value or organic produce. He pointed out that some sectors, such as tea, had successfully diversified into these markets, but emphasised that perishables faced additional challenges due to shorter shelf life. 

He noted that accessing these markets would require investments in cold chain infrastructure, Global GAP certification, or internationally accepted organic certification, along with consistent compliance with Maximum Residue Limits (MRLs), areas where Sri Lanka currently lags behind other competing exporting nations.

Disruption at every point

University of Peradeniya (UOP) Faculty of Agriculture Department of Crop Science Senior Professor Buddhi Marambe explained that the prevailing Middle East crisis disrupted every nodal point in the entire agri-food system, with the fuel and gas disruptions leading to a compounding effect.

The agri-food system includes everything from input supply to production, processing, distribution, consumption, and waste management. The current situation involves both oil and gas disruptions, which he described as a serious development affecting overall energy supply. The Strait of Hormuz facilitates the shipment of approximately 33–35% of global fertiliser supply, and around 35% of global nitrogen-based fertilisers, including urea.

Prof. Marambe explained that nitrogen fertilisers were particularly important due to the dynamic nature of nitrogen and its essential role in crop productivity. Thus, any disruption to the supply of nitrogen fertilisers, particularly urea, would have a dramatic impact on the overall system. When the input supply is affected, output is inevitably impacted, leading to an increase in both cost of production and cost of consumption, all of which would in turn affect food availability.

Sri Lanka has two cultivating seasons with regard to food crops and the country is just completing the Maha season and entering the Yala season. As such, Prof. Marambe explained that the timing of the crisis was particularly serious. He noted that harvesting was still ongoing  in some parts of the country, while in others, land preparation for the Yala season had already begun. Moreover, paddy cultivation is heavily mechanised at both the land preparation and harvesting stages, which depend heavily on fuel.

The Department of Agrarian Development recently announced a special fuel distribution system for farmers, bypassing standard QR code restrictions, in order to maintain food security. However, the increased fuel prices lead to increased cost. Prof. Marambe explained that increased fuel costs would affect not only land preparation and harvesting but also drying, transportation, milling, storage, wholesale distribution, retail, and even cooking. Thus, both fuel shortages and price increases will contribute to higher production costs and, ultimately, higher consumer prices. 

Prof. Marambe noted that Sri Lanka was relatively secure in terms of seed paddy, as the country produced its own seed supply and did not import paddy in order to protect local genetic material. The largest issue for paddy is fertiliser, as Sri Lanka relies on urea for nitrogen, Triple Super Phosphate (TSP) for phosphorus, and Muriate of Potash (MOP) for potassium. 

While Sri Lanka currently has adequate stocks of TSP and MOP, he observed that urea supply remained the key concern amid global disruptions. The Strait of Hormuz plays a key role here. Sri Lanka also imports urea from Gulf countries and China – the largest producer of urea, which has reduced exports to ensure domestic supply – while India, although a major producer, remains a net importer and restricts exports. Hence, countries tend to prioritise their own food security during crises.

Prof. Marambe further noted that Sri Lanka had around 102,000 MT of urea available at present for the Yala season, while paddy cultivation alone would require approximately 98,800 MT if recommendations were followed. He added that while 77,000 MT of urea had been ordered, around 50% of the orders had been cancelled due to the current scenario.

According to him, maize cultivation would need approximately 12,000–13,000 MT of urea, fruit and vegetable cultivation would require about 42,000–43,000 MT, and plantation crops including tea, coconut, and cinnamon would require approximately 62,000–63,000 MT. He stated that this indicated a significant shortfall.

“Given these constraints, my recommendation to the Government is to prioritise crops during the crisis. We should prioritise paddy as the staple crop, followed by maize due to its importance in animal feed and poultry production, and tea due to its role as a major export crop that generates foreign exchange.”

However, he emphasised that agriculture alone could not achieve food security, as international trade played an important role. “With shortages, productivity declines, resulting in the need for compromise in subsequent seasons. This will make the system very challenging should the crisis continue.”

Prof. Marambe further recommended strengthening G2G negotiations to secure fertiliser and seed supply, specifically for crops such as maize, and maintaining buffer stocks of fertiliser for at least two to three months through both private sector and State importers. He also suggested that instead of broad subsidies, the Government could consider incentivising storage of fertiliser. 

Concerning the supply of agricultural inputs, Prof. Marambe highlighted the need to explore advanced third and fourth generation fertiliser technologies, which are mixtures, or else, slow-releasing, and at times, nano-level fertilisers providing higher efficiency. For this purpose, research institutions would need to undertake firm scientific research.

He further stated that given Sri Lanka’s current economic situation, it would be economically unproductive for the Government to subsidise all sectors, adding that consumers would ultimately bear part of the cost. Thus, he pointed out the importance of transparent communication and preparing for potential price increases and continued disruptions. 

Prof. Marambe also noted that even if the conflict were to end, recovery of infrastructure and supply chains would take time, meaning that energy, fertiliser, and food supply disruptions could continue for some time. “The crisis is a reminder that Sri Lanka must focus on a food security plan, which is the way forward,” he said.

Vulnerabilities across the value chain

International Fund for Agricultural Development (IFAD) and Asian Development Bank (ADB) Agribusiness and Value Chain Specialist and Consultant Nilushana Sooriyaarachchi explained that the fuel shortage in Sri Lanka exposed serious vulnerabilities across the agricultural value chain, beginning at the farm level.

“Limited access to diesel could disrupt land preparation, irrigation, and harvesting, particularly for mechanised operations. As a result, farmers may reduce the cultivation extent or delay planting, leading to yield losses and increased production costs. While fuel quotas were introduced, inconsistent targeting limited their effectiveness,” he said.

Sooriyaarachchi noted that the disruption may extend to input supply chains, where delays in transporting fertiliser, seeds, and agrochemicals could create shortages and price increases, in line with the upcoming Yala season. He added that remote farming areas, which formed informal markets, were disproportionately affected, further distorting prices. Moreover, he observed that this highlighted the need for more decentralised input distribution systems and stronger farmer organisations to manage last-mile delivery.

“Post-harvest handling and market access are among the most serious aspects. Fuel shortages could constrain the movement of produce, increasing spoilage, especially for perishables like vegetables and fish. Farmers are usually forced into distress sales, while consumers face price volatility. Thus, the mismatch between farmgate and retail prices reflect inefficiencies in logistics and market coordination.”

Small traders, transporters, and agro processors also face severe challenges due to limited fuel access and rising operating costs. According to Sooriyaarachchi, many operate below capacity or may even consider temporarily exiting the market. Thus, the crisis highlights how dependent the entire value chain is on fuel-based transport and centralised market systems, with very limited resilience to shocks.

Moving forward, he said that building resilience would require actions such as prioritising fuel access for agriculture, investing in decentralised aggregation and storage infrastructure, strengthening farmer organisations, and promoting energy alternatives like solar-powered systems. “This crisis is yet another clear reminder that a more localised, efficient, and coordinated value chain model is essential for long-term stability,” he said.

From external shocks to the kitchen

Speaking to The Sunday Morning Business, UOP Department of Agricultural Economics and Business Management Senior Professor Sarath S. Kodithuwakku noted that the impact of the ongoing conflict would be transmitted across the entire agricultural value chain, from external shocks to macroeconomic pressures, then to disruptions in the value chain, and finally to household-level outcomes.

He noted that the effects would begin as exogenous shocks, including disruptions to energy supplies such as fuel and Liquefied Petroleum Gas (LPG), as well as fertiliser availability. He added that remittances from Middle Eastern countries could also become volatile, affecting rural cash flows that many farmers depended on for cultivation. In addition, logistical disruptions in trade, including shipping and navigation challenges, could further strain supply chains.

“At the macro level, fertiliser prices will definitely increase due to supply restrictions and higher fuel costs, which will also add to transportation costs. As a result, both the availability and affordability of fertiliser would become a concern. On the other hand, seed availability could also be affected, specifically given Sri Lanka’s dependence on imported hybrid seeds for certain crops, while paddy cultivation relies almost entirely on locally produced seed paddy.”

Sri Lanka’s agricultural system operates based on biological time windows connected to rainfall patterns. Prof. Kodithuwakku explained that the inability to adhere to these time windows would lead to delays in cultivation and harvesting timelines, thereby affecting both yield and quality.

He further noted that increasing import costs would increase pressure on foreign exchange, contributing to currency depreciation. This, in turn, could lead to higher interest rates, making it more difficult for farmers to access affordable credit and creating constraints for agricultural production.

Commenting on how these disruptions translated into the agricultural value chain, he observed that most farmers in Sri Lanka remained production-oriented rather than market-oriented. As a result, many farmers tend to cultivate the same crops at the same time, leading to price fluctuations. Moreover, farmers generally have limited power within the supply chain, while wholesalers and intermediaries hold more influence. In this context, any delays related to cultivating, harvesting, or transporting can lead to significant issues. 

Prof. Kodithuwakku also highlighted inefficiencies in the traditional supply chain, including a lack of coordination among actors and significant post-harvest losses, which he said remained at around 30–40%, similar to levels from decades ago. He thus pointed out that inefficiencies in the system increased costs and reduced returns to farmers. 

He further observed that delays and shortages related to fertiliser and fuel would reduce production and quality levels and delay transportation, further increasing losses, with farmers at the receiving end. 

Prof. Kodithuwakku also noted that delays in harvesting, specifically in crops like paddy, could affect quality and storability. This means that there could be longer-term implications, particularly in relation to seed paddy availability for future cultivation seasons, indicating that disruptions at one stage would carry through to subsequent stages. 

“In agriculture, unlike certain other production systems, the ability to stop and restart from where things have been left off is highly unlikely. There are specific time windows, and if these are missed, recovery is not possible,” he explained.

At the household level, he observed that increasing food prices and energy costs would place additional pressure on consumers, raise the overall cost of living, especially for rural households dependent on agriculture, and impact purchasing power to access adequate food, leading to nutritional issues. “At the end of the day, if this continues, several systems will be impacted, affecting food security, rural income stability, and overall market access,” he said.

Following an inquiry by The Sunday Morning Business, the Department of Agriculture revealed that the total quantity of pesticides approved for import from January to the end of March this year was 3,897 tonnes. It is estimated that LCs had not been opened for about 40% of the products approved for import this year due to some manufacturers not having issued LCs due to problems in the production of certain pesticides on account of the prevailing war situation and difficulties in obtaining raw materials.

Accordingly, there are likely to be delays in receiving certain products from shipping routes in affected regions. The department estimates that only about 2,338 tonnes from the approved quantity can be received this year.

Attempts by The Sunday Morning Business to contact the Deputy Minister of Agriculture were unsuccessful.