By Raj Gonsalkorale

Donald Trump – US will ‘obliterate’ Iran’s power plants if Strait of Hormuz are not open before the 48-hour deadline

Iran – ‘‘If Iran’s fuel and energy infrastructure is attacked by the enemy, all energy, information technology, and desalination infrastructure belonging to the United States and the (Israeli) regime in the region will be targeted,’‘ a spokesperson for the Khatam al-Anbiya Central Headquarters, the body overseeing Iranian military operations, said in a statement reported by Fars News Agency

The catastrophe before the entire world is evident if the above threats are carried out by the USA and Iran. Food insecurity will spread throughout the world and the most vulnerable will be the poorer countries of the world like Sri Lanka.

Amongst many challenges facing Sri Lanka from the conflict in the Middle East, even prior to the above threats, is the country’s food security and the impact on export income from plantation industry crops like Tea, Rubber and Coconut. From the context of the conflict, besides logistics issues arising from challenges to transportation into and out of the country, central to the production of all agricultural products, is the impact arising from shortage of chemical fertiliser and the cost of fertiliser. While longer term strategic options have to considered relating to fertiliser, the current dependency on chemical fertiliser as an essential food” for agricultural crops (food and plantation industry crops) is inescapable and unless this food is provided, there will be mass shortages of food for the people. Impact on the plantation industry will result in drop in production and drop in export income for the country.

Based on data (USDA Foreign Agricultural Service) from previous disruptions (such as the 2021 import ban) and current 2026 economic projections, it has been reported that a serious supply chain disruption of inorganic fertiliser would likely cost Sri Lanka between $700 million and $1 billion per year in direct agricultural losses.

This estimate is primarily driven by the high cost of food imports and the impact on the tea sector and other plantation crops.

Estimated Breakdown of Costs

• Lost Export Revenue (Tea): $425 million. Historical data from the World Bank and International Water Management Institute (IWMI) shows that fertiliser shortages caused an 18% to 30% drop in tea production, resulting in roughly $425 million in lost foreign exchange earnings.
• Food Security & Import Substitution (Rice): $200M – $300M+. While Sri Lanka typically produces enough rice to be self-sufficient, a severe fertiliser shortage can cause yields to drop by 32% to 40%. This forces the government to spend hundreds of millions in foreign currency to import rice, which is far more expensive than importing the fertiliser itself.
• Other Plantation Crops: $100M – $150M. Shortages hit rubber and coconut sectors heavily, which combined earn over $1.5 billion annually. A 10%–20% decline in these sectors adds significantly to the total economic burden. 

While the government is very likely looking into these issues and discussing how best to mitigate the impact of likely production and transportation challenges, the writer wishes to suggest that in view of the criticality of the twin issues involved which will impact on food availability for the people, and on the governments foreign exchange income, the government elevates the coordination and management of this challenge to a high level Agricultural Command Centre (ACC)  reporting direct to the President.  

Establishing such a centre vested with the necessary executive power is a practical and effective way to move beyond policy wish lists into execution. To be effective in the Sri Lankan context, this body must sit above the individual ministries, and relevant ministries should work closely with this Unit which will be like a war room dealing with food security and the impact of the Mid East crisis on sectors that are dependent on imported chemical fertiliser.

A very important area that the ACC should be tasked with is to ensure government subsidies (already roughly $300M–$400M annually) are provided to keep prices stable for farmers as a huge rise in production costs could further exacerbate the crisis if farmers cease producing food crops. The government will have to increase its subsidy allocations and manage this exercise in consultation with the Finance Ministry.

Why a war Room?

In the agricultural sector, a food crisis and a drop in production of export-based plantations is a crisis that could hurt the country in the immediate and the long term. Tackling this crisis is not about appointing committees and having talkfests. It requires immediate action. Traditional ministerial approaches led by laid back bureaucrats is not the way to address a crisis of this nature. It needs an approach akin to a war room that is a, dedicated, centralized entity that is used for high level planning and collaboration, and rapid decision-making. Originating in military strategy, the concept is now commonly used in business for crisis management, project launches, or complex operational problem-solving. A war room as proposed will be making quick decisions, ensuring decisions are acted upon and monitoring and reporting on progress made. An entity armed with sufficient executive powers to give directions to ministries will provide avenues to fast-track crucial decisions. Hence a war room.

What does data show?

Data shows that the ongoing Middle East conflict has introduced new supply costs as of March 2026:

1. Urea prices jumped roughly 50% (from $482 to $720/t) in just three weeks. The amount spent in 2025 is reported as around USD 200 million. Given the price hike and the likelihood of further price hikes, the cost to import the same quantity will be at least double this amount, ie USD 400 million. Sri Lanka imports bulk of its requirements from China which has a coal-based manufacturing methodology which is not directly impacted by the mid-east crisis. However, as reported by Reuters, it has triggered a significant shift in China‘s urea strategy, primarily causing a halt in exports rather than a drop in domestic production. It has moved to restrict shipments to protect its own food security and domestic prices as global fertilizer markets destabilize. Although China’s urea is mostly coal-based, the Middle East crisis impacts production costs and raw material availability indirectly: 

Energy Costs: Rising global oil and natural gas prices, driven by the conflict and the closure of the Strait of Hormuz, have increased the operational and production costs for all fertilizers.

Sulphur Squeeze: China is heavily dependent on the Middle East for sulphur (importing roughly half its 9.6 million ton requirements from the region in 2025). While primarily used for phosphates, the extreme price volatility and supply risk for sulphur have forced China to “conserve” energy and resources across its entire chemical sector.

LNG Imports: China gets roughly 25%–30% of its LNG from the Middle East. Disruptions in these flows strain gas-based urea plants, particularly in southwest China. 

• Shipping & Freight Surcharges: Disrupted routes have increased transport costs by approximately 35%, directly raising the retail price for Sri Lankan farmers.
• Impact on food production, Tea and Plantation Sectors

• Rice (Paddy): Previous shortages of inorganic fertiliser led to a 40% to 53% drop in rice production, forcing Sri Lanka to spend hundreds of millions on imports to ensure food security.
• Vegetables and Other Crops: Production of vegetables and cash crops like bananas and maize crashed by 50% to 70% during previous input shortages.
• Production Decline: Past data from the Central Bank of Sri Lanka (CBSL) shows that a sudden withdrawal of chemical fertilizers caused tea production to plummet by 18% to 28.7%. Since smallholders produce about 75% of the national tea crop, they are most at risk from price spikes or supply disruptions.
• Export Revenue Risk: Tea brings in over $1 billion annually (roughly 11% of exports); significant shortages could lead to permanent loss of market share to competitors like Kenya and India. 
• Coconut and Rubber: Experts warn that these sectors, which earned $1.5 billion in 2020, would see similar yield plummeting without chemical inputs. 

The proposed Agricultural Command Centre should be tasked with the responsibility of developing a Risk Mitigation Plan within a week of its formation and submitting the plan to the cabinet for approval. Among other key requirements, the plan should include Status on the existing fertiliser stocks and any stocks shipped and not received yet.The duration of this stock based on current rates of distribution.Future sources of supply and risks associated with such suppliesEstimates on cost of fertiliser and funding availability Expenditure on current subsidies and estimates on future subsidies and funding availability.Assessment of local transportation challenges and alternate plans for distribution of fertiliser and produce should the fuel situation exacerbate.Alternate plans to address food security should the international energy situation worsens

The APP should also look into ways and means of sourcing more inorganic fertiliser from countries like China and  Russia (who supplied around USD 52 million worth in 2024) as well as other sources, considering that  Qatar,  Saudi Arabia and the UAE which supplied around USD 68 million in the same year may be unable to supply in the near future.

Long term measures to address challenges arising from fertiliser and other inputs to the Food and Plantation Sector

While a War room should focus on the immediate crisis and take steps to mitigate it, considering the importance of food security and plantation management in the longer term, and the need to address the key issue of fertiliser that impacts on the entire sector, a suggestion is also made that a ministerial committee headed by the Prime Minister and comprising of the Minister for Agriculture, Minister of Plantation Industries, the Minister of Irrigation and Water Management should be instituted to update the respective ministerial strategic plans ensuring inter dependencies between the activities of each ministry are taken note of in the respective strategic plans.

The policy decision taken to ban the importation of chemical fertilizer in 2021 may have been a sound in principle” strategic decision, but an ill thought of implementation decision. It failed to recognize the need to basically wean the affected plantations away from inorganic fertilizer and the fact that this weaning process is a long-drawn process.

Consequent to the ban, some progress was made in the initial production of organic fertilizer in Sri Lanka. However, by 2025–2026, the sector had contracted with many of these startups failing, leaving only a handful of survivors as farmers reverted to chemical fertilizers due to severe yield losses and food insecurity. 

The Middle East crisis has highlighted the strategic importance of a fertiliser industry in Sri Lanka to ensure food security and to support the plantation industry. The high-level ministerial committee mentioned earlier should assess the current status of the industry and develop a long-term strategic plan to make the country self-sufficient in fertiliser. A long-term strategy needs to be developed for a transition to organic fertiliser via a hybrid model. Experts believe the transition period will be 10 to 15 years. 

Long term planning is often absent in Sri Lanka due to the constant shift in government priorities toward short-term policies that fit 5-year election cycles over long-term structural planning. Long-term agricultural roadmaps are often viewed by officials as “luxury planning” that can wait until the fiscal deficit is stabilized.

Besides this, fragmentation of agricultural policy in Sri Lanka where it is split across multiple, often competing, entities have contributed to the absence of a mindset to undertake long term planning.The Ministry of Agriculture is responsible for policy making on paddy and food crops, and the National Fertiliser Secretariat, The Ministry of Irrigation is responsible for water management, while the Ministry of Plantation Industries is responsible for tea, rubber, and coconut industries. Provincial Councils are responsible for local implementation. Without a single overriding authority or a unified delivery unit to drive the National Agriculture Policy, long term planning initiatives get lost in bureaucratic silos.

The fundamental importance of food security in the country and effective performance of the plantation sector is unquestionable. It is also important for both to have irrigation and water management as a key component of the country’s National Agricultural Policy. This fundamentalism is crucial for immediate planning and execution via the Agriculture Command Centre or long term, strategic planning via the hight level ministerial committee headed by the President. If this fundamentalism is not understood, food insecurity will prevail and export earnings from the plantation industry will dwindle and will not move to an upward trajectory as needed by the country.