Lawmakers pushed to diversify fertilizer supply amid China reliance

By Norman P. Aquino, Associate Editor and Pexcel John Bacon

THE PHILIPPINES should diversify fertilizer sources and boost domestic capacity to reduce exposure to China and global supply shocks, according to a congressional policy paper, as imports declined but dependence on a single supplier deepened.

In a report released this month, the Congressional Policy and Budget Research Department (CPBRD) of the House of Representatives warned that the country’s fertilizer import structure remains highly concentrated among a small number of suppliers, exposing the agriculture sector to external supply disruptions and geopolitical risks.

“This heavy reliance poses a serious supply chain risk, with Chinese imports alone accounting for 53.6% of the country’s total supply in 2025,” the House think tank said.

The CPBRD said the Iran war and the crisis involving the closure of the Strait of Hormuz, aside from China’s export controls, could continue to raise fertilizer costs in the coming months, adding pressure on agricultural production and food prices.

“The Philippines has seen a significant decline in its reliance on imported fertilizers to sustain rice and maize yields,” the CPBRD said, adding that import trends also point to a concentration risk in supply.

Fertilizer imports fell 6.8% to 2.37 million metric tons (MT) in 2025 from 2.54 million MT in 2023, based on Bureau of Customs data cited in the report, reflecting lower fertilizer application rates and easing demand.

Fertilizer use also dropped, with application declining by 30.1% to 199.4 kilograms per hectare in 2023 from a year earlier, the CPBRD said, citing data from the Food and Agriculture Organization.

Nitrogenous fertilizer, mostly urea, accounted for 61.3% of total imports over 2023-2025, followed by mixed fertilizer at 28.7% and potassic fertilizer at 9.6%, it said.

China increased its share of Philippine fertilizer supply despite the fall in overall volumes. Imports from China rose to 1.27 million MT in 2025, equivalent to 53.6% of total shipments.

Other suppliers lagged far behind. Indonesia held an 8.2% share, followed by Canada at 5.8%, Brunei Darussalam at 5.2%, and Malaysia at 5.1%, while the remaining 22.1% came from 45 countries combined.

China’s role is more pronounced in key product segments. It supplied 39.1% of nitrogenous fertilizer and 79.1% of mixed fertilizer imports, backed by its coal-based ammonia production and large phosphate reserves.

Canada dominated potassic fertilizer supply with a 51.2% share, while India accounted for 50.6% of organic fertilizer imports.

The CPBRD said the concentration of suppliers exposes the country to supply chain risks, including export restrictions and geopolitical disruptions.

The Philippines gets almost half of its inorganic fertilizers from China, and relatively large volumes also from Indonesia and Malaysia, Federation of Free Farmers Board Chairman and former Agriculture Secretary Leonardo Q. Montemayor told BusinessWorld.

“All these countries are inherently dependent on oil-based inputs from the Middle East, or are affected indirectly by what is happening there,” he said in a Viber message, adding that exporting countries would prioritize domestic supply before meeting demand from buyers like the Philippines.

Mr. Montemayor said reliance on China also carries strategic risks. “With China, the added concern is it may use our dependence on them as leverage in our conflict over the West Philippine Sea,” he said, noting that developing alternative sources would take time and might not be realistic in the near term.

Global fertilizer prices rebounded in 2025 after easing in the previous two years, reflecting tighter supply and higher input costs.

Conflicts in key regions raised costs for inputs such as natural gas and sulfur, which are critical to nitrogen and phosphate fertilizer production.

China’s export caps on phosphates and output adjustments by major producers also tightened supply conditions, the CPBRD said.

Policy support for farm inputs remains in place. Fertilizers intended for agricultural use are exempt from tariffs under Republic Act (RA) No. 8435 or the Agriculture and Fisheries Modernization Act, and from value-added tax under RA 10963 or the Tax Reform for Acceleration and Inclusion law.

Nonagricultural fertilizer imports are subject to tariffs of 1%, 3%, or 7% plus a 12% value-added tax, although rates remain relatively low under regional and most-favored-nation commitments.

Revenue from nonagricultural fertilizer imports declined 5.2% to P307.1 million in 2025 from a year earlier. Nitrogenous and potassic products accounted for 75.6% of the total.

Collections rose in early 2026 as costs increased. Import revenues reached P106.72 million from January to April, with nitrogenous fertilizer contributing P56.14 million, mixed fertilizer at P28.25 million, and potassic fertilizer at P21.18 million.

The CPBRD said risks from higher input costs and export controls are likely to persist, pointing to the need for diversified sourcing, supply buffer measures and support for alternative inputs to stabilize farm production and prices.

Mr. Montemayor said lower fertilizer use likely reflects rising prices rather than efficiency gains. Reduced application without substitutes could cut farm output, he pointed out.

He said alternative inputs remain limited, with organic fertilizer accounting for about 10% of total demand.

“The government will need to actively and sustainably promote the use of such inputs,” he said, warning that farmers tend to revert to chemical fertilizers once prices stabilize unless incentives are sustained.

He said soil testing should also be expanded to improve efficiency. Fertilizer misuse remains common, with farmers applying nutrients that may not match actual soil requirements, he added.

Jayson H. Cainglet, executive director of the Samahang Industriya ng Agrikultura, said field conditions show a broader strain on farm activity as higher fertilizer costs weigh on planting decisions.

“This is not simply a supply issue; it is a profitability crisis,” he said in a Viber message, noting that farmers are being squeezed by rising input costs and continued inflows of cheaper imports.

He said many farmers have cut fertilizer use, shifted to lower-input crops or skipped planting altogether when prices surged to as high as P3,000 per bag before easing to about P2,000.

He added that delayed subsidy releases and skepticism over alternative inputs have limited uptake, reinforcing a cycle of lower planting, weaker domestic output and rising reliance on imports.