PUTRAJAYA, June 22 — The Ministry of Agriculture and Food Security (KPKM) expects lingering disruptions in global agricultural supply chains for up to two years, despite a United States-Iran agreement to end the West Asia conflict and reopen the Strait of Hormuz.
KPKM secretary-general Isham Ishak welcomed the peace treaty signed on a hard copy by US president Donald Trump in Versailles, France, and electronically by Iranian president Masoud Pezeshkian last Wednesday.
However, the top KPKM official doesn’t expect prices of fuel, fertiliser, or animal feed to return to pre-war levels anytime soon.
“We are happy that the war has ended, but we understand that the prices will not go back to normal for at least two years because of the destruction that happened to the oil facilities in that area,” Isham told CodeBlue in an exclusive interview at Wisma Tani here last Friday.
“We feel that it would take about two years for redevelopment, and we think that in two years’ time, normalcy will be achieved. We hope that things will be much more stable by then.”
Three days after the signing of the US-Iran memorandum of understanding that established a 60-day ceasefire, Iran closed the Strait of Hormuz again last Saturday due to continued fighting between Israel and Hezbollah in Lebanon, threatening a slow uptick in shipping traffic, The New York Times reported.
High-level talks between the US and Iran didn’t get off to a good start in Switzerland yesterday, as Iranian negotiators reportedly walked out in protest at various threats issued by Trump on social media over the weekend. The American delegation in Switzerland was led by vice president JD Vance, while its Iranian counterpart was headed by the speaker of Iran’s parliament, Mohammad Bagher Ghalibaf.
KPKM ‘War Room’ Activated Before Conflict
Isham said KPKM had begun preparing for a possible conflict even before hostilities in the Persian Gulf erupted in late February, setting up a Ministry War Room and conducting scenario planning around potential disruptions to agricultural supply chains.
“Prior to that, we’ve started discussions on how to prepare if the situation persists to where there will be war,” he said. “Fortunately, there was pre-planning and we were ready.”
While the conflict initially had limited impact, he said disruptions became more apparent as the war progressed, particularly around May and June, affecting fuel supplies, fertiliser availability, and imported animal feed inputs.
Fuel emerged as the Ministry’s primary concern because much of the agricultural sector relies on machinery, such as tractors and water pumps.
“We felt that would be a major disruption in terms of supply,” Isham said. “If there is a disruption in supply, of course there will be cost implications.”
The Ministry also projected fertiliser shortages and price increases, while rising imports of agricultural inputs, particularly animal feed, posed another major challenge.
“Those were the three sectors that we felt would be most impactful,” Isham said, referring to fuel, fertiliser, and animal feed. “There are many, but these are the most impactful.”
According to Isham, the government mitigated fuel-related cost increases by bringing forward diesel subsidy payments to farmers. Instead of disbursing the full RM300 subsidy later, RM200 was advanced earlier to ease immediate cost pressures.
On fertiliser supplies, Isham said Malaysia had benefited from early procurement efforts before prices escalated and from close cooperation with domestic suppliers.
“We are happy that we have enough supply until the end of the year,” he said, adding that KPKM had worked closely with state oil company Petronas and international suppliers to secure fertiliser stocks and obtain assurances on future deliveries.
Although costs have risen, Isham described the increases as “manageable”. The Ministry modelled various scenarios based on potential movements in Brent crude oil prices and conducted simulations to estimate the impact on agricultural inputs.
“We didn’t know how much the cost escalation would be, so we ran some simulations and were very fortunate that they fell within a band that we were able to work around,” Isham said.
Domestic Feed Production Helped Cushion Shock
Isham also credited earlier efforts to strengthen domestic animal feed production for cushioning the impact of global supply disruptions.
About 18 months ago, KPKM launched an initiative to expand local feed production, including corn for silage, a type of preserved livestock feed, as well as kenaf and Napier grass used to feed cattle and other ruminants.
Since last year, more than 10,000 hectares have been added for corn cultivation intended for livestock feed.
“We were fortunate that we had those programmes up and running,” Isham said. “When this crisis happened, we had sufficient supply of animal feed, which balanced out the increased costs.”
Despite ongoing market uncertainty, Isham said Malaysia has sufficient food supplies to meet domestic demand over the coming year.
“Alhamdulillah, I can assure you that we have sufficient supply of food for the next year,” he said, citing domestic production of paddy and other crops.
He added that Padiberas Nasional Berhad (Bernas), the country’s rice importer, maintains sufficient buffer stocks to support Malaysia’s rice supply for more than a year if needed.
KPKM Braces For ‘Grand El Niño’ Impact On Vegetable Production
Beyond geopolitical risks, KPKM is also preparing for what Isham described as a “grand El Niño” phenomenon that is expected to bring extreme heat across the region later this year.
“There are pros and cons to it,” Isham said. Perlis, for example, recorded a bumper Harumanis mango harvest this year, with production rising from four tonnes to 40 tonnes due to prolonged hot and dry conditions.
However, Isham said KPKM expects the most significant El Niño impacts to emerge between late June and August and is closely monitoring vulnerable crops.
For paddy cultivation, he said risks are expected to be manageable because the current planting cycle began in May. “For paddy, it takes about 110 to 120 days, so they are in the middle and towards the tail end of the season,” Isham said.
“We don’t need much water, so in terms of paddy, it’s manageable.”
Vegetable-producing areas however, such as Cameron Highlands and Kundasang, remain a concern if temperatures rise excessively. “We hope that the temperature will not go too high and affect our production there,” Isham said.
The Ministry has been working with stakeholders on preparedness measures, including ensuring adequate pumps, irrigation capacity, and water supply systems for farms.
Isham said maintenance work on irrigation infrastructure had been carried out ahead of the anticipated El Niño.
“We really don’t know how extreme the heat will be and how prolonged it will be,” he said. “But we are closely monitoring, engaging with our stakeholders and doing the necessary preparation just in case it happens.”
No Turf War With Palm Oil Industry Over Fertilisers
Isham also dismissed concerns that the agriculture sector could face competition from the palm oil industry for scarce fertiliser supplies.
“Actually, we don’t fight for fertilisers. We complement each other,” he said.
KPKM and the Ministry of Plantation and Commodities maintain separate supply networks and coordinate their procurement needs, he explained. The timing of fertiliser demand also differs, with the palm oil sector currently focused on large-scale replanting activities.
Malaysia’s fertiliser ecosystem is further supported by domestic production, particularly urea, as well as imports from countries including Australia and Uzbekistan.
While food crops and palm oil generally use similar fertiliser components, Isham said the formulations differ according to crop requirements.
“The formulation is different,” he said. “It’s a mixture of nitrogen (N), phosphorus (P), and potassium (K).”
