A war with Iran could plunge the world into a ‘food crisis,’ warns the UN – National organization
If the war with Iran continues unabated, with the Strait of Hormuz blocked to all shipping traffic, the world could be headed for a “global agrifoods crisis,” the UN’s Food and Agriculture Organization has warned.
“The clock is ticking,” FAO chief economist Maximo Torero said in a recent report.
Ships carrying vital agricultural supplies must start sailing through the Strait of Hormuz as soon as possible to avoid the risk of food price spikes later this year, the FAO has warned.
If the US-led war in Iran continues, the protracted conflict “could cause a series of consequences similar to the effects of the COVID-19 crisis,” according to the FAO.
“We are in a supply crisis; we don’t want to make it a disaster,” said David Laborde, director of the FAO’s Agrifood Economics division.
“The difference lies in the actions we take,” Laborde said.
The “supply problem” refers, in particular, to the decline in the global supply of fertilizers.
The war is squeezing the supply of agricultural supplies, says University of Guelph food economist Mike von Massow.
“A large amount of fertilizer comes through the Strait of Hormuz to the rest of the world, especially nitrogen fertilizer, which is made from natural gas,” said von Massow.
Although estimates vary widely, the FAO says that exports of between 20 and 45 percent of all the world’s agricultural food commodities rely on sea transit through the Strait of Hormuz.
The FAO said that while global food prices stabilized in March due to high food supplies, especially grains, “pressures are increasing in April.”
The pressure will only increase if the conflict continues in May, the report warned, as “farmers will make decisions” to switch to another crop or adapt as fertilizer dries up.
“As we see some countries currently need gas for food because it does not enter the road, we will see some farmers have no fertilizer at all. Then the yield will decrease, especially in developing countries,” said von Massow.
“That would mean starvation,” he added.
Why is fertilizer so important?
Fertilizer shortages put the health of farmers in developing countries – already suffering from rising temperatures and changing climate systems – at greater risk, and could lead to people everywhere paying more for food.
The poorest farmers in the Northern Hemisphere rely on imports of fertilizer from the Gulf, and the shortage comes as the planting season begins, said Carl Skau, deputy executive director of the World Food Programme.
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“In the worst-case scenario, this means lower yields and crop failure next season. In the best-case scenario, higher input costs will be passed on to food prices next year,” Skau said.
Nitrogen and phosphate – two major fertilizer elements – are at risk from the closure of the Strait of Hormuz.
Nitrogen supplies, including urea, a commercial fertilizer that helps plants grow and increase yields, are the most affected by shipping delays and the rising price of liquefied natural gas, a key ingredient.
The conflict has limited about 30 percent of the world’s urea trade, said Chris Lawson of CRU Group, a London-based commodities consultancy.
According to the 2022 report, two-thirds of the world’s calories come from four staple foods: wheat, rice, corn and soybeans. At least 72 percent of these crops are grown in just five countries: China, the United States, India, Brazil and Argentina.
This raises the fear of global food insecurity when an important route like the Strait of Hormuz is choked.
Some food producers may begin to limit exports as they struggle to produce enough food for their people, von Massow said.
“We saw it during the war in Ukraine. When there is less wheat available, countries like Argentina and India cut back, put quotas on exports or put taxes on imports,” he said.
In 2023, when India restricted rice exports to control domestic prices, it had an impact on global food prices.
Could a fertilizer shortage hurt Canadians?
Soaring fuel and fertilizer prices have Canadian agricultural producers engaged in an expensive game of chance.
Diesel and fertilizer prices have nearly doubled since the war involving the US, Iran and Israel, as tensions have choked off vital oil and gas exports from the Strait of Hormuz.
Although North American farmers may be protected from the worst effects for now, von Massow said.
“Fortunately, many farmers in North America start booking their fertilizers in the fall, so they will not be affected this year. But in other areas, if the prices of fertilizers increase too much and there was no reservation in advance, they can reduce the fertilizer, which can damage the harvest,” he said.
But higher fertilizer prices will eventually affect Canadian farmers, he added.
Canadians are already dealing with high food prices. Last week, Global News reported that some of Canada’s largest food suppliers have notified their grocery customers that they will begin charging fuel surcharges as fuel costs rise.
Canadian food prices rose in March. Retail food prices increased 4.4 percent in March, compared to 4.1 percent in February.
Fresh vegetables saw the biggest increase, with fresh vegetable prices rising 7.8 percent in March. This was a significant increase compared to February, which did not increase the price of fresh vegetables (0.5 percent).
This is the largest increase in the prices of fresh vegetables since August 2023, when they increased by 8.7 percent.
– Wfiles from the Associated Press and the Canadian Press
