For Bangladesh, energy and food security are inseparable

Bangladesh's recent fertiliser shortage may have eased, but the vulnerability it exposed has not.

The problem is larger than a temporary shortage of urea or a spike in fertiliser prices. Bangladesh's food system is increasingly tied to global energy markets through fertiliser, irrigation, transport and, less visibly, biofuels. When energy prices rise, the shock can reach food markets through several channels at once.

That risk is already visible globally. The FAO Food Price Index reached 131.1 points in July 2026, its highest level in three years. The World Bank projects fertiliser prices to rise by more than 30% in 2026 amid disruptions to energy and fertiliser markets. 

Energy is not the only cause of rising food prices — weather, geopolitical disruptions and trade restrictions matter too — but it has become an important transmission channel and risk multiplier. For Bangladesh, that means energy and food security are no longer separate policy problems.

When energy competes with food

The first channel is straightforward: natural gas is both an energy source and a feedstock for urea. Higher gas costs raise fertiliser-production costs directly, and when supplies are disrupted, domestic factories may have to reduce or stop production, pushing Bangladesh further onto imports.

Bangladesh saw this starkly in March 2026, when a gas shortage forced five of the country's six major urea fertiliser plants to suspend production, leaving only the Shahjalal Fertiliser Company operational. 

According to the Bangladesh Chemical Industries Corporation, the five major plants require about 197 million cubic feet of gas a day to operate at full capacity — a target rarely met even in normal conditions. The episode showed how quickly an energy shortage becomes an agricultural-input shortage.

The second channel is less obvious. Higher oil prices make biofuel production more attractive, and when maize, sugarcane, and palm oil are increasingly diverted to ethanol or biodiesel, demand for them is no longer set by food and feed markets alone — energy markets begin competing for the same agricultural resources, even where global food demand itself hasn't changed.

The same energy shock can therefore raise the cost of producing food while simultaneously increasing demand for the crops used to produce fuel.

What this means for Bangladesh

Bangladesh's annual fertiliser requirement is projected at about 6.77 million tonnes for FY2026–27. State-owned factories produced only 1.106 million tonnes in FY2025–26 against demand of about 6.6 million tonnes — meeting just 17% of requirements, with more than 80% supplied through imports. 

This is not simply a matter of factory capacity: gas availability has become a binding constraint. One major urea plant remained shut for an extended period for lack of gas, and in March, five of six major urea factories were shut simultaneously as authorities rationed supply.

A gas shortage can reduce domestic fertiliser production, forcing Bangladesh to rely more heavily on imports. This increases exposure to international fertiliser prices, ultimately raising agricultural production costs.

This dependence matters because fertiliser is not optional for Bangladesh's rice-based farming system — rice accounts for roughly three-quarters of national fertiliser use. And the global market shows how quickly this exposure turns expensive. 

In September 2026, the government approved the import of 40,000 tonnes of DAP fertiliser from Morocco at $894 per tonne, around $113 per tonne (14.5%) higher than the World Bank's July 2026 average price of about $781 per tonne. Higher international prices increase Bangladesh's fertiliser import bill, put pressure on foreign exchange reserves, and, because fertiliser subsidies keep farm-gate prices affordable, create simultaneous agricultural, fiscal, and balance-of-payments pressures.

Fertiliser is not the only pathway. Bangladesh has about 1.65 million major irrigation pumps, of which roughly 1.22 million run on diesel, irrigating some 3.02 million hectares (Asian Development Bank estimates). A rise in diesel prices therefore enters agricultural costs directly through irrigation, on top of its effects on land preparation, harvesting, and transport.

Higher energy prices raise irrigation and transport costs, which in turn increase farm production costs and put pressure on both farm margins and food prices.

Bangladesh's vulnerability is thus not concentrated at one point in the food system — it sits simultaneously in fertiliser production, fertiliser imports, irrigation, transport, and distribution.

The biofuel channel makes the risk broader. Major economies are increasingly diverting food and feed commodities into energy production. Indonesia's B40 programme allocated about 15.6 billion litres of biodiesel in 2025, mainly from palm oil. India's biofuel consumption is projected to rise from 293 petajoules in 2025 to 429 petajoules by 2030, driven partly by ethanol. 

The United States maintains a mandate for 15 billion gallons of conventional renewable fuel, largely corn ethanol, while Brazil produced nearly 40 billion litres of ethanol in 2025 from sugarcane and maize. These policies can tighten global markets for palm oil, maize, sugar and vegetable oils, affecting food-importing countries such as Bangladesh even when they produce little or no biofuel themselves. 

An energy shock can therefore reach Bangladesh through two distinct international channels at once: costlier imported fertiliser and inputs, and a higher global value for the crops used in biofuel. Energy competes with food not only through production costs, but through the allocation of agricultural commodities themselves.

What the 2008 crisis teaches us

The 2007-08 global food crisis is a warning, though today's situation shouldn't be treated as a repeat of it. Crude oil rose from around $30 a barrel in 2003 to more than $147 by mid-2008. 

Fertiliser costs climbed, biofuel production expanded, and export bans from major producers including India and Vietnam triggered panic buying that sent rice from roughly $300 a ton to over $1,000 within months. Global hunger rose from about 850 million people to over a billion within a year. Bangladesh was not insulated: domestic rice prices rose roughly 38% and unrest followed in several districts.

The lesson isn't that today's shock will produce another 2008 — global markets differ, and today's pressures are also shaped by weather and geopolitics that weren't identical then. The lesson is more basic: when energy, agricultural inputs, commodity markets, and trade policy are disrupted simultaneously, the shocks reinforce one another. 

That's why Bangladesh should focus not only on today's fertiliser price, but on the structure that determines how an external shock moves through the economy — and that structure matters most for who ends up bearing its cost.

Bangladesh's latest Household Income and Expenditure Survey shows food accounts for 45.8% of total household spending nationally — rising to 58.4% for the poorest decile, against just 33.3% for the richest. A food-price shock is not distributionally neutral: poor households have far less room to absorb higher food costs by cutting elsewhere, so an energy-driven price shock erodes their real purchasing power disproportionately.

Farmers face a related but distinct squeeze. If fertiliser, diesel, electricity, transport, and irrigation costs rise faster than farm-gate prices, margins tighten, and farmers may cut fertiliser or other inputs — risking yields the following season.

Higher prices for consumers, higher production costs for farmers — neither problem is addressed by looking at food prices alone.

What Bangladesh should do

Emergency imports and farmer support are the natural response to a fertiliser shortage, but they cannot substitute for structural resilience.

First, Bangladesh must ensure fertiliser security. Diversify import sources, begin procurement well ahead of peak planting periods, and maintain strategically located reserves for critical seasons. A country that imports most of its fertiliser cannot eliminate external exposure, but it can blunt the consequences of any single disruption.

An energy shock can reach Bangladesh through two distinct international channels at once: costlier imported fertiliser and inputs, and a higher global value for the crops used in biofuel. Energy competes with food not only through production costs, but through the allocation of agricultural commodities themselves.

Second, conduct an honest economic assessment of domestic production. The goal shouldn't be maximum domestic output for its own sake. Each plant should be judged on its gas requirement, efficiency, cost, and strategic value — reliable gas supply where production is competitive and strategically important, long-term import arrangements where it is persistently uncompetitive.

Third, reduce agriculture's fossil-fuel dependence. Given the scale of diesel irrigation, more efficient irrigation, greater use of electricity and solar pumps where viable, better soil management, and more precise fertiliser application can all cut the energy and fertiliser needed per unit of output.

Fourth, build an integrated energy-food early-warning system. A joint monitoring mechanism across agriculture, energy, finance and food-security agencies should track oil and fertiliser prices, shipping disruptions, domestic gas availability, fertiliser stocks, import commitments and food prices — allowing procurement and policy responses before a shortage becomes a crisis.

Global energy and fertiliser prices may eventually ease, but that shouldn't lead Bangladesh to treat this episode as temporary and therefore irrelevant. The real warning is structural: a large fertiliser requirement, limited domestic production, heavy import dependence, substantial diesel dependence in irrigation, and a population for whom food absorbs an unusually large share of household spending — vulnerabilities that reinforce each other rather than sitting apart.

Bangladesh cannot control global oil prices, biofuel mandates, fertiliser trade restrictions, or geopolitical disruption. It can reduce how much of an external energy shock becomes a domestic food-security shock. That requires treating energy security, fertiliser security, and food security not as separate policy problems, but as parts of the same system.

Golam Rasul, PhD, is Professor of Economics at the International University of Business Agriculture and Technology (IUBAT), Dhaka, Bangladesh. He can be reached at golam.grasul@gmail.com 

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.