Iran War Threatens Global Food Supply, Fertilizer Costs Soar
AMRITSAR, India (AP) – A critical chokepoint for global trade, the Strait of Hormuz, is experiencing drastically reduced shipping traffic due to the ongoing conflict involving the U.S., Israel, and Iran. The disruption is sending shockwaves through the world’s food supply chain, particularly impacting fertilizer availability and driving up prices, experts warn.
Approximately one-third of all fertilizer shipped worldwide passes through the Strait of Hormuz, the narrow waterway between the Persian Gulf and the Gulf of Oman. With traffic reduced to a trickle, the cost of essential goods like oil, natural gas, and fertilizer has risen sharply. Fertilizer prices are up around 30 percent in some parts of the world, according to Noah Gordon, a fellow at the Carnegie Endowment for International Peace.
The Gulf region is a major producer of fertilizer and the raw materials needed for its production, including natural gas and minerals, supplied by countries like Saudi Arabia, the United Arab Emirates, Kuwait, and Iran. The reduced flow of these resources is creating a significant bottleneck.
“You’re also losing the other supplies that come from those countries and help produce fertilizer in other places,” Gordon said.
Countries heavily reliant on these supplies – including Pakistan, India, and Brazil – are already feeling the effects. Some fertilizer plants in India, Bangladesh, and Pakistan have been forced to halt production entirely as natural gas and oil prices surge.
This isn’t the first time global fertilizer production has been disrupted. The Russian invasion of Ukraine in 2022 caused similar issues, prompting countries to seek alternative sources, primarily from the Middle East. However, Máximo Torero, chief economist for the United Nations Food and Agriculture Organization, says that option is no longer viable.
“The loss of Gulf exports creates an immediate global shortfall with no quick substitutes,” Torero stated. He also noted the lack of strategic international fertilizer stockpiles, unlike those maintained for oil.
The most immediate impact will be felt in South Asia, specifically Bangladesh, India, Pakistan, and Sri Lanka, as well as in East Africa (Sudan, Kenya, and Somalia) and the Middle East (Turkey and Jordan). The timing of the impact will vary depending on regional planting seasons.
In India, farmers are already expressing concern about fertilizer prices and availability ahead of the June planting season. Avinash Kishore, a researcher with the International Food Policy Research Institute in New Delhi, noted a growing sense of unease.
“The preparation for fertilizers and other inputs needs to begin already. There is a little bit of nervousness about what if the war continues for too long. What will happen to the next season?” he said.
The rising cost of oil is compounding the problem, impacting all aspects of food production. Tractors, machinery, and transportation all rely on oil, further increasing costs. Torero predicts this will lead to less food in the markets and higher global food prices.
Even a small increase in food prices can have a devastating impact on vulnerable populations. A five to ten percent rise could be detrimental to hundreds of millions of families, with children being particularly at risk of malnutrition.
The disruption is also affecting export markets. India, a major exporter of rice (including basmati) and fruits like mangoes and grapes, is seeing its trade with Gulf countries suffer.
While a swift reopening of the Strait of Hormuz could mitigate the damage, Torero emphasizes the need for a quick recovery to stabilize prices. “We hope that quickly the markets can recover and we stabilize prices,” he said.
(Photo: A farmer sprinkles fertilizer over crops at a rice field on the outskirts of Amritsar, India, July 23, 2024. Narinder Nanu/AFP/via Getty Images)
