Dry Season Amid War
June 2026 may become one of the most sensitive months for Indonesia’s food system in recent years.
Not due to a sudden major crisis, but because three pressures are converging at the same time: the Iran war, the threat of a prolonged dry spell due to El Niño, and the rise in global energy costs.
On the surface, everything still appears normal. Markets remain open. Food distribution continues to function.
But in the modern food system, the greatest vulnerability often emerges precisely when society does not yet feel it is in an emergency situation.
The Iran war has fundamentally altered something in the global economy: the sense of security regarding energy.
Around 20 percent of the world’s oil trade still passes through the Strait of Hormuz. When this route is disrupted, global energy prices immediately rise.
Brent crude briefly surpassed 126 US dollars per barrel in March 2026 before stabilising at a high of 90–100 US dollars.
This means every increase in global oil prices directly feeds into the costs of transportation, food logistics, food refrigeration, fertiliser, and inter-island distribution.
What is visible is only a gradual rise in the price of rice or chicken. But what is actually happening is that the entire baseline cost of the food system is rising simultaneously.
Climate predictions for 2026 are beginning to show a strong El Niño pattern, with some analysts suggesting it could approach the scale of 1997–1998, one of the worst drought episodes in Indonesia’s history.
During that period, millions of hectares of land faced water stress, and large forest fires occurred in many regions.
In the context of 2026, the problem is not just a decline in rice production. The problem is far more systemic.
A prolonged dry spell reduces irrigation water availability. When water decreases, paddy field productivity falls.
At the same time, fertiliser costs are rising because global gas prices have increased due to the Iran war. Asia’s LNG prices even surged more than 140 percent following disruptions to Qatar’s energy facilities.
At this point, the chain of pressures becomes clearly visible.
Global energy prices rise. Fertiliser costs increase. Planting expenses grow. Food production is pressured by the drought.
Inter-island distribution becomes more expensive. Imported inflation begins to enter through wheat, soybeans, sugar, and other food items that still depend on international markets.
Ultimately, this pressure converges on household purchasing power. That is not all.
Indonesia is indeed strong in palm oil. National CPO production is in the range of 47–50 million tonnes per year. But Indonesia’s current palm oil structure is also tied to biodiesel and export markets.
When global oil prices rise, demand for biodiesel increases accordingly. As a result, some of the palm oil price pressure shifts to the domestic market through cooking oil and processed foods.
What is apparent is that Indonesia benefits from commodity exports. But what is actually happening is that domestic households are beginning to compete with the global energy market.
In such conditions, Dani Rodrik’s thinking on the fragility of globalisation becomes highly relevant.
Global integration does make the system more efficient under normal conditions.
But when energy, climate, and geopolitics are disrupted simultaneously, that efficiency turns into extremely high sensitivity.
And Indonesia has one additional constraint that is rarely discussed seriously enough: geography.
When diesel prices rise, the costs of shipping and trucking increase immediately. As a result, price disparities between regions widen much faster than in continental countries.
This is where the problem lies. The government still has stabilisation instruments. But fiscal space is starting to narrow.