Fertilizer and animal-feed prices rise as Middle East conflict boosts input costs

Oil prices have surged amid the Middle East conflict, pushing up input costs and leading to adjustments in Vietnam’s domestic fertilizer and animal-feed prices by about 5% to 11%. The latest report from the Ministry of Agriculture and Environment shows fertilizer prices rising sharply since March, with increases varying by product and grade.

Fertilizer prices rise domestically

In the south, DAP prices rose most sharply as Korean DAP climbed to 1.13 million dong per 50 kg bag, up 50,000 dong from the average of the first two months of the year. Some NPK grades also increased, including Co Bay at 870,000 dong per bag and Co Vang at 785,000 dong per bag.

Other products saw milder increases. Chinese DAP was listed at 886,000 dong per bag, Phu My Urea at 553,100 dong, and international NPK at 1.193 million dong per bag, with typical increases of 1,000 to 3,000 dong.

Overall, in Q1 fertilizer prices rose year over year: Chinese DAP increased by about 11%, international NPK by 8%, and Chinese urea by about 5%.

Global market signals broader cost pressure

On the world market, DTN data shows eight major fertilizer products were higher than in February. UAN28 rose the most, up 13%. Urea increased 12% to $674 per ton, while tight urea moved above $900 per ton, the highest level since May 2023.

Year over year, many fertilizer items rose by roughly 11% to 31%. The report links the spread of cost pressures to energy prices, noting that fertilizer prices are directly affected by oil-price fluctuations because oil is a key input for production and transport.

Company view: logistics and energy costs driving increases

Vu Dinh Tuan, a representative of Ca Mau Fertilizer Joint Stock Company, said input costs have risen sharply in line with oil prices. He also cited logistics costs increasing by 20% to 30% internationally and 15% to 20% domestically.

“For every $10 oil price increase, costs for the business could rise by about 525 billion dong,” he said.

Industry responses and policy call

To manage higher costs, firms are maintaining high plant utilization to optimize expenses and negotiating with transport partners to control logistics. When domestic demand weakens, exports of urea and NPK are used to maintain plant capacity and cash flow.

The industry also urged reducing fertilizer export taxes from 5% to 0% to improve competitiveness.

Feed prices also climb

Feed prices are rising alongside fertilizer and transport costs. Since the start of the year, many companies have increased feed prices by an additional 100 to 300 dong per kg. By March, the pace was clearer in some provinces such as An Giang, where prices rose by another 7,000 to 12,000 dong per bag (25 to 40 kg).

Current reference prices include starter pig feed at about 480,000 dong per bag (25 kg), pig meat feed at 360,000 to 370,000 dong, and common poultry feed ranging from 260,000 to 370,000 dong. Compared with earlier levels, prices have risen by about 2% to 5%, depending on the product.

Impact on farmers and food-price risk

Authorities said rising input costs are putting significant pressure on farmers, while output prices have not increased correspondingly. This is narrowing margins and creating risks for food prices.

Trade data: imports down but prices steady

On trade, fertilizer imports in Q1 reached 910,200 tons, worth $290.9 million, down more than 30% year over year. Average import prices rose modestly by 1.2%. China, Russia, and Laos were identified as the three largest suppliers, underscoring Vietnam’s dependence on foreign markets.

Imports of animal feed and ingredients totaled $1.05 billion in Q1, down 9.5%. The United States, Argentina, and China were the main markets, but volatility across sources was attributed to ongoing supply-chain instability.

Geopolitical outlook: Hormuz Strait as a key driver

The Ministry of Agriculture and Environment said future price dynamics will depend heavily on the Middle East conflict. If the Hormuz Strait is opened soon, input costs could ease, pulling feed prices down by about 3% to 5%. If disruptions persist, fertilizer and feed prices could remain elevated.

The conflict, which began in late February and has continued, has disrupted global supply chains. The blockade of the Hormuz Strait—described as responsible for transporting about one-third of global fertilizer supply—has not only affected trade but also influenced gas and other input materials used in fertilizer production. The resulting global price increases have been transmitted to import markets, including Vietnam.

The ministry concluded that this geopolitical shock highlights Vietnam’s reliance on global supply chains in agriculture, where a single choke point such as the Hormuz Strait can lift input costs across the board.