March Oil Price Shock Pressures Farm Costs and Agricultural Prices

This advisory examines the March 2026 oil price hikes triggered by the escalating conflict in the Middle East and their effects on farm inputs and selected food commodities in the Philippines. It highlights rising fuel and fertilizer costs, sharper price increases in selected vegetables, and moderate movements in rice prices. The article discusses the implications for farmers facing higher production and marketing costs and for consumers facing food affordability concerns. It also presents government responses, including fuel subsidies, fertilizer import measures, proposed fuel tax relief, the declaration of the State of National Energy Emergency, and activation of UPLIFT. Alongside the Nutrient Return Program (NRP) under the DOST-PCAARRD-funded initiative AGRI-INNNOVATE, which helps strengthen long-term agricultural resilience.

Source: DOST-PCAARRD

Rising Oil Market Risks Amid Escalating Middle East Conflict

The escalating conflict in the Middle East raised serious concerns over disruptions in global oil supply and their consequences for the Philippine economy. On March 3, 2026, Agriculture Secretary Francisco Tiu Laurel Jr. said the Department of Agriculture (DA) was closely monitoring the situation, particularly its potential effects on petroleum-based fertilizers and transport costs. He also warned that higher bunker fuel prices could increase the landed cost of imported commodities such as wheat and animal feed, further pressuring local food prices. These developments are particularly significant for Philippine agriculture because oil price shocks affect not only transport and logistics, but also the cost of key farm inputs and production activities along the value chain. Rice and highland crops, in particular, remain an important commodity to monitor because fuel and fertilizer are major components of production, postharvest handling, and distribution.

Fuel Price Increases Intensify

In the Philippines, fuel prices are generally set by private oil companies rather than directly controlled by the government. Under Republic Act No. 8479, or the Downstream Oil Industry Deregulation Act of 1998, the sector was liberalized, and fuel prices are now largely driven by market forces and competition. This deregulated pricing structure means that movements in global oil prices are quickly transmitted to domestic fuel prices, particularly during periods of geopolitical tension and supply uncertainty.

This became evident in March 2026, when fuel prices posted successive weekly increases. The Department of Energy (DOE) price monitoring and reports (Table 1) show that on March 3, 2026, price increase reached ₱1.90 per liter (L) for gasoline, ₱1.20/L for diesel, and ₱1.50/L for kerosene. By the following week, oil firms announced sharper increases equivalent to about ₱7.00/L to ₱13.00/L for gasoline, ₱17.50/L to ₱24.25/L for diesel, and ₱32.00/L to ₱38.50/L for kerosene. Further increases were reported for the week of March 17, 2026, reflecting continued and deepening volatility in the domestic fuel market. Figure 1 shows sharp increases in actual fuel prices, based on data collected through the GMA Integrated News and DOE price monitoring reports in Metro Manila. Taken together, these rapid adjustments raised concerns over higher farm production, hauling, and food distribution costs.

Table 1. Summary of Oil Price Increase (₱/L), March 2026

Source: DOE, 2026

Fuel market disruptions extended beyond pump price increases. As of March 23, 2026, the Philippine National Police (PNP) reported that 403 gas stations had temporarily closed nationwide amid the fuel price surge, up from 273 a few days earlier. Authorities are investigating whether some closures were due to hoarding, profiteering, or other price-manipulation schemes. While these closures do not necessarily indicate a nationwide fuel shortage, they may still affect fuel access, transport operations, and distribution flows, with possible spillover effects on the movement of agricultural goods and food commodities.

Expected Effect on Prices of Agricultural Inputs and Commodities

Rising oil prices are expected to put upward pressure on agricultural and food prices through two main channels: higher fuel and fertilizer costs. The second channel is especially important because fertilizer prices were already rising even before the full March oil shock. World Bank data showed that the average price of diammonium phosphate (DAP) fertilizer increased by 3.76% from $603.8 per metric ton (MT) in January 2026 to $626.5/MT in February 2026, while urea rose by 8.13% from $436.5/MT in 2025 to $472/MT this year, indicating that fertilizer markets were already under pressure. By March 2026, concerns intensified further as governments and importers sought to secure alternative fertilizer sources amid geopolitical tensions and potential supply disruptions.

As oil prices continue to rise, transport-intensive and fertilizer-dependent commodities, especially selected highland and high-value vegetables, may become more vulnerable to higher market prices. Rice is also exposed because fertilizer and fuel are important cost items in rice production and distribution. Average retail price data from the DA’s Bantay Presyo monitoring database indicate some early signs of this vulnerability, as shown in Table 2. From February 20, 2026, before the March oil price hikes, to March 20, 2026, moderate price increases were recorded for selected rice and staple commodities, including imported regular milled rice (+4.80%), imported premium rice (+3.90%), local well milled rice (+3.94%), local premium rice (+4.16%), local other special rice (+2.48%), white corn (+4.24%), and sardines (+7.27%). Papaya (+3.82%) and watermelon (+6.02%) also posted increases during the same period.

Table 2. Changes in Average Retail Prices (₱/kg) of Selected Agricultural Commodities, February – March, 2026

Source: DA Bantay Presyo, 2026

Sharper increases in average retail prices (Figure 1) were observed in selected high-value and highland vegetables: eggplant increased by 23.5% from ₱77.08 to ₱95.18 per kilogram (kg), squash increased by 23.3% from ₱60.28 to ₱74.34/kg, green bell pepper increased by 13.2% from ₱228.11 to ₱258.10/kg, red bell pepper increased by 6.0% from ₱235.48 to ₱249.69/kg, cauliflower increased by 12.4% from ₱110.73 to ₱124.41/kg, carrot increased by 67.9% from ₱98.27 to ₱165.00/kg, and Baguio beans increased by 47.2% from ₱99.71 to ₱146.73/kg. These price movements suggest that selected highland and high-value vegetables may be responding more quickly to rising transport, handling, and input costs, including fertilizer, than staple commodities such as rice. Because these crops often move through longer supply chains, they may reflect the effects of fuel pressures earlier than commodities whose prices are shaped by a wider mix of market and policy factors.

Ground-level validation from the Batong Malake Public Market in Los Baños, Laguna, corroborates the national trend. Estimated retail price ranges rose by 33% to 42% for carrots, 8% to 11% for eggplant, 50% for squash, 20% to 25% for both green and red bell peppers, and 25% to 33% for cauliflower. The alignment of these local price movements with the DA Bantay Presyo data suggests that the upward movement in highland vegetable prices was not limited to national monitoring averages, but was also evident in an actual local market setting.

Government Support and Response Measures

To cushion the effects of rising oil prices on agriculture, the DA allocated ₱100 million under its fuel subsidy program for farmers and fisherfolk. Under the program, qualified farmers may receive ₱5,000 each, while eligible fisherfolk may receive ₱3,000, providing direct relief for rising fuel and transport costs that affect farm production and food supply. The assistance is released through the Interventions Monitoring Card (IMC). Beyond fuel assistance, the agency also moved to secure fertilizer supply, another major cost item affected by the oil shock. On March 18, 2026, the DA said it was seeking additional fertilizer imports from Russia and Belarus to help ease pressure on farm inputs.

At the national policy level, the government also pursued measures intended to temper the pass-through of rising global oil prices to domestic fuel and food markets. On March 13, 2026, President Ferdinand R. Marcos Jr. certified as urgent a bill allowing the temporary suspension or reduction of excise taxes on petroleum products during extraordinary price spikes. This policy response is relevant to both farmers and consumers because reducing fuel taxes can help ease the cost of farm operations, product hauling, transport, and food distribution. Lower fuel-related expenses may, in turn, help lessen upward pressure on the prices of agricultural commodities and basic food items in the market.

On March 24, 2026, the government declared a State of National Energy Emergency and activated the Unified Package for Livelihoods, Industry, Food, and Transport (UPLIFT) as a whole-of-government response framework. UPLIFT is intended to ensure energy supply stability, support sectors such as transport, agriculture, and MSMEs, and protect Filipinos from the broader economic effects of global oil supply disruptions. UPLIFT reinforces the need to secure fuel access, maintain food distribution, and reduce the vulnerability of farmers and consumers during prolonged periods of energy market instability.

DOST-PCAARRD Initiative on Nutrient Return Program

In response to the surge in input costs driven by the global oil price shock, DOST-PCAARRD is advancing innovative, science-based solutions to help cushion farmers from rising production expenses. Central to this effort is the Nutrient Return Program (NRP), which promotes the conversion of unsold and excess vegetables into green manure and biofumigants that can be reintegrated into farming systems. By transforming potential waste into valuable farm inputs, the NRP not only addresses the challenge of surplus produce but also reduces farmers’ dependence on increasingly expensive, energy-intensive fertilizers. This approach improves soil health, lowers production costs, and provides a more sustainable and cost-efficient pathway for vegetable production, contributing to both income stability and food security.

Through technical assistance, market-based support, and policy mechanisms that encourage adoption, the project is expected to generate practical evidence on nutrient recycling, improve resource efficiency, lower fertilizer and pesticide expenses, and strengthen the resilience and sustainability of vegetable farming systems in CAR. The project is ongoing and will be implemented until July 2027.

Market Outlook

Average retail prices of selected agricultural commodities increased from February 20, 2026, to March 20, 2026, amid rising fuel costs and fertilizer concerns linked to the global oil supply constraint caused by the Middle East war. By March 17, 2026, fuel price adjustments reached ₱12.90/L to ₱16.60/L for gasoline, ₱20.40/L to ₱23.90/L for diesel, and ₱6.90/L to ₱8.90/L for kerosene. During the same period, the sharpest increases in average retail prices were recorded in selected vegetables, particularly carrot (+67.90%), Baguio beans (+47.16%), eggplant (+23.48%), and squash (+23.32%). Validation data from Batong Malake Public Market in Los Baños, Laguna, likewise showed increasing price ranges for selected highland vegetables, reinforcing the pattern observed in the DA Bantay Presyo data. These price movements suggest that highland and high-value vegetables may already be affected by higher fuel, transport, and input costs, while rice prices do not yet clearly show the direct effect of the oil price hike.

For farmers, higher retail prices do not necessarily mean better returns, as rising fuel and fertilizer costs continue to increase production and marketing expenses. Farmers need to closely monitor costs, improve input efficiency where possible, and pay attention to market schedules and price movements. For consumers, higher vegetable prices may reduce purchasing power and raise food affordability concerns, especially if supply and transport pressures persist. Consumers are advised to compare prices across markets and consider lower-cost alternatives when available. While current government interventions may help ease short-term impacts, broader efforts are still needed to strengthen the sector against future energy-related shocks. The Nutrient Return Program (NRP) remains important in reducing dependence on imported oil and costly farm inputs while strengthening long-term agricultural resilience. The declaration of a State of National Energy Emergency and the activation of UPLIFT highlight the need for coordinated action to secure energy supply, protect key sectors, and cushion the effects of the global oil market disruptions.

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