Chile: They foresee a steady increase in the production costs of potatoes, wheat and oats at the regional level.

The conflict in the Middle East continues to escalate, with no clear end in sight. As a result, this situation is expected to drag on, significantly impacting international trade. One of the most evident effects has been the partial blockade of goods transiting the Strait of Hormuz, a strategic waterway that has led to a considerable increase in the international price of crude oil, repeatedly exceeding $100 per barrel.

This price increase has also impacted the global price of fertilizers, directly affecting agricultural producers in the region. Concerns are growing, as this rise leads to higher production costs. Basic agricultural products such as potatoes, wheat, oats, lettuce, and tomatoes, which rely heavily on these inputs, could experience price increases.

José Miguel Stegmeier, president of the Biobío Agricultural Society (Socabio), an organization that brings together various regional producers, expressed his concern regarding the impact of high fertilizer costs on agricultural planning. He emphasized that these inputs represent a significant portion of the expenses associated with planting. 

Stegmeier noted that this challenging scenario is not new, as similar situations occurred during the pandemic and in the context of the armed conflict in Ukraine. He expressed hope that this situation is temporary and will not interfere with the normal start of the planting season. He also commented that oilseed and grain plantings are about to begin in the fall, which makes it urgent to make decisions despite the low returns obtained during the last agricultural season due to the drop in grain and cereal prices.

The union leader concluded by pointing out that the immediate increase in input costs linked to the rise in oil prices represents a problem beyond the direct control of farmers, who face serious difficulties in finding quick solutions.

From an academic perspective, Andrés Acuña, director of the Master’s Program in Applied Economics at the Department of Economics and Finance of the University of Bío-Bío (UBB), analyzed the current economic context. He explained that tensions in the Middle East and restrictions on transit through the Strait of Hormuz have negatively impacted international fertilizer prices. According to Acuña, more than 30% of these products pass through this conflict zone, intensifying the upward trend experienced since the end of 2015. Recent reports from ODEPA (Office of Economic Studies and Planning) show cumulative increases, such as 5.6% for granular potassium and 21.7% for granular urea through February of this year.

The academic highlighted how this scenario will impact both costs and final prices for farmers in the Biobío region. In crops produced regionally where fertilizers have a significant impact on the cost per hectare—such as corn (40%), tomatoes (44.2%), lettuce (45.3%), oats (47.6%), wheat (57.7%), and potatoes (59.6%)—the effects could be substantial.

For its part, the Ministry of Agriculture warned of the potential implications for regional agricultural production due to the increased cost of essential fertilizers, such as urea, phosphates, and potassium. They emphasized that the rise in production costs could force some farmers to reduce the amount applied, likely leading to lower yields and reduced crop quality. This represents a direct blow to profitability, especially for sectors like small-scale family farming and producers focused on food crops for the domestic market.

Amid this global economic and political uncertainty, the agricultural sector is anxiously awaiting developments in the Middle East conflict. Authorities emphasized the need for prudence given the constant volatility in agricultural input prices during the current season.