Fertilizer prices have risen by up to 150%, putting pressure on the palm oil industries in Malaysia and Indonesia.
Conflicts in the Middle East have driven up the price of raw materials for fertilizer production by 100-150%, threatening the profits of oil palm plantations and posing risks to global vegetable oil prices.
Palm oil producers in Malaysia and Indonesia are facing severe financial pressure as fertilizer prices escalate rapidly. This situation stems from supply disruptions and rising input costs, forcing many suppliers to adjust price lists or temporarily suspend accepting new orders.
Raw material prices have skyrocketed due to geopolitical conflicts.
According to market reports, the prices of several key fertilizer production components increased by 100% to 150% in just the first half of March 2026. The main cause identified was the escalating conflict in the Middle East and the blockade of the Strait of Hormuz, disrupting the flow of oil and gas – essential raw materials for fertilizer production.
Challenges to plantation profit margins
The situation is particularly dire at oil palm plantations, where fertilizer costs often account for up to 60% of total production costs. The soaring prices of agricultural chemicals are directly reducing profits, forcing companies to implement austerity measures or seek alternatives to stay afloat.
Faced with rising input costs, many farmers and producers have begun shifting to using a portion of organic fertilizers or a combination of organic and mineral fertilizers. This is currently considered the optimal solution to reduce costs, improve soil quality, and move towards more sustainable productivity in the long term.
Warning about the impact on the vegetable oil market.
Economists warn that if geopolitical conflicts continue, pressure on the agricultural sector in Malaysia and Indonesia will increase. This will not only affect domestic supply chains but also potentially push global vegetable oil prices to new highs.
