The Strait of Hormuz closure has sent fertilizer prices soaring, threatening food supplies for billions and pushing farmers to delay or cancel planting.
The blockage of the Strait of Hormuz is causing a much larger problem than just a global energy crisis . While oil and gas are critical to energy security for nearly every country on Earth, petroleum is also at the heart of global food systems.
A crude oil shortage is also a fertilizer shortage, with potentially disastrous consequences for farmers and consumers, especially in the world's poorest countries. As the war in Iran stretches on, half the world's calories are at risk. Roughly half of all fertilizer feedstock exports in the world pass through the Strait of Hormuz on a typical day.
Chemicals like urea, ammonia, sulfur, hydrogen, natural gas, and nitrogen are critical components in nitrogen-based fertilizer, which serves as a foundational input for global agrifood supply chains. Since the Strait of Hormuz closed to nearly all shipping traffic on February 28, fertilizer prices have already surged enormously, more-than doubling from their previous levels.
And as the status of the Strait remains in limbo as the United States and Iran struggle to agree to ceasefire terms, we can expect prices to keep on rising. Even the reopening of the Strait wouldn't provide immediate relief for food systems.
'When a durable peace is reached, allowing ships to once again traverse the strait, fertilizer companies will still have to wait for natural gas production in the Gulf to ramp up to regain their feedstock supply, which will take months or even years,' reports Semafor, a nonpartisan news outlet. Happily for consumers, prices for key commodity crops have not yet reflected the skyrocketing upstream prices.
But this leaves farmers in a serious and painful squeeze, especially since there is no commercial-scale alternative to nitrogen-based fertilizer. As a result, many farmers will be forced to put off their planting schedules while they wait for prices to re-stabilize or forgo using fertilizer altogether, with potentially disastrous results for global food supplies.
'If you have a calendar that you have always followed for planting season, you just basically have to throw that thing out the window, because everything has just had a bomb dropped on it,' Andy DeVries of DeVries Farm in Iowa recently told The Verge. 'There's just not much wiggle room, and you're stuck between a rock and a hard place.
' Echoing this sentiment, the United Nations' Jorge Moreira da Silva has said that 'The planting season has already started... So if we don't get some solution immediately the crisis will be very significant and severe, particularly for the poorest countries and for the poorest citizens.
' Food systems in countries such as Sudan, Somalia, Mozambique, Kenya, and Sri Lanka are highly vulnerable as they are still struggling to recoup from previous market shocks. 'The disruption of the Strait of Hormuz can push 45 million more people into hunger and starvation,' da Silva went on to say. 'So, clearly, we need to do something. ' Accordingly, da Silva has started a U.N. task force dedicated to solving supply chain issues for nitrogen-based fertilizers and feedstocks.
In spite of these policy efforts, however, experts warn that we can expect critical food shortages and inflation in the coming months. While food prices haven't reflected the rising prices of fertilizer yet, it's only a matter of time. The International Fresh Produce Association projects that the intensifying fertilizer shock could cause a 1- to 3-percent increase in prices at the grocery store to global fresh food shortages.
Historically, inflation of food staples and food price shocks is a major driver of conflict. Many experts believe that the widespread chaos of the Arab Spring, for example, was a direct result of rising food costs across the region, which led to mass-scale unrest. Adding food inflation to today's already precarious geopolitical climate could therefore majorly fan the flames of conflict and civil unrest before the end of the year, in many corners of the globe. By Haley Zaremba for Oilprice.com
Fertilizer Prices Food Crisis Iran War Nitrogen Fertilizer Energy Crisis Global Food Supply Food Inflation Urea Prices Ammonia Shortage
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
20,000 sailors stuck in Gulf as shipping traffic drops 92% amid Strait of Hormuz tensionsThe UK Maritime Trade Operations Centre in Portsmouth is monitoring a 92% drop in shipping traffic through the Strait of Hormuz due to blockades and attacks. Around 20,000 sailors are stranded as tensions escalate. The center, led by Commander Jo Black, provides 24/7 support to vessels navigating the region, coordinating neutral information to ensure safe passage.
Read more »
£370m Russian superyacht linked to Putin ally sails through Strait of HormuzA superyacht linked to a key ally of Vladimir Putin was allowed to sail through the Strait of Hormuz despite the blockade that is in place.
Read more »
easyJet issues passenger update amid talks of surcharge over jet fuel shortageIn recent weeks, fuel prices have doubled due to the Strait of Hormuz being shut.
Read more »
Russian Yacht Transits Strait of Hormuz Amidst US-Iran Tensions, Putin Meets Iranian OfficialA Russian superyacht linked to a sanctioned billionaire sailed through the contested Strait of Hormuz while Vladimir Putin hosted an Iranian delegation, signaling a strengthening strategic relationship between Russia and Iran as tensions escalate between the US and Iran. Russia appears to be benefiting economically from the conflict and may be increasing its military involvement.
Read more »
Sanctioned Russian Billionaire’s Yacht Nord Transits Restricted Strait of HormuzA superyacht linked to sanctioned Russian steel tycoon Alexey Mordashov has passed through the Strait of Hormuz despite near-total traffic restrictions imposed by Iran, raising questions about sanctions enforcement and geopolitical alignment between Russia and Iran.
Read more »
Untouchable Putin just sailed a yacht through the strait - he's laughing at TrumpThe passage of a £370m luxury yacht through the Gulf is significant as the US has imposed strict controls on shipping as part of its standoff with Iran
Read more »