UN warns of global food crisis
Amid escalating geopolitical tensions in the Middle East, the Food and Agriculture Organization of the United Nations (FAO) has issued a stark warning about the potentially disastrous consequences of closing the Strait of Hormuz. The threat is no longer simply a traditional “oil shock” as seen in past decades; it has evolved into a profound structural shock that could trigger a global food crisis, crippling supply chains.
Historical context and strategic importance of the Strait of Hormuz
Historically, the Strait of Hormuz, which connects the Persian Gulf, the Gulf of Oman, and the Arabian Sea, is one of the world's most strategically important waterways. This strait has long been a geopolitical flashpoint, with the region experiencing numerous tensions from the 1980s to recent escalations. As the global economy has evolved and become increasingly reliant on interconnected supply chains, the impact of any disruption to this waterway is no longer limited to energy markets but extends to other vital sectors, most notably agriculture and food production.
Repercussions extend beyond energy markets
In this context, Máximo Torero, chief economist at the FAO, emphasized that the disruption of maritime trade through the Strait of Hormuz represents one of the most severe shocks that global trade could face in modern times. He explained that the negative impact would extend beyond energy systems to severely affect food systems, agricultural production, and global markets, jeopardizing the food security of millions of people.
The Strait of Hormuz is of paramount importance as a vital artery through which approximately 20 million barrels of crude oil pass daily, representing about 35% of total global production. In addition to oil, the strait also carries one-fifth of the world's liquefied natural gas production and, more importantly in the food sector, roughly 30% of international fertilizer trade. Recent data has shown a sharp decline in oil tanker traffic, exceeding 90%, in the days following the latest escalation, resulting in immediate and severe economic disruption.
Regional and international impact on agriculture
Regionally and internationally, the Gulf Cooperation Council (GCC) countries play a pivotal role as major sources of sulfur and phosphate and nitrogen fertilizers, such as urea and ammonia. These countries hold the lion's share of global trade in these essential agricultural inputs. Consequently, any disruption to their supplies would directly lead to a dramatic increase in agricultural production costs across the globe.
The FAO's economic forecasts paint a worrying picture, predicting that global fertilizer prices will rise by 15% to 20%, and could reach levels between 20% and 50% during the first half of this year if the crisis persists. Adding to the problem is the sharp increase in marine cargo insurance costs, an additional burden that will continue even as the crisis eases.
The time factor and the future of food security
The organization's experts emphasize that the duration of the crisis will be crucial in determining the scale of the disaster. If the disruption is short-lived, markets may be able to absorb the shock and return to stability within approximately three months. However, if the lockdown continues for three months or more, the risks will multiply, impacting agricultural decisions for the current and upcoming seasons. This scenario will inevitably lead to a sharp decline in the production of strategic crops such as wheat, rice, and corn. Furthermore, rising oil prices will intensify competition for biofuels.
Despite Torero's assurances that global food reserves are still sufficient for the time being, the continuation of these disruptions for extended periods will negatively affect agricultural production and raise food prices to a level that burdens developing countries and importers of fertilizers and energy, thus presenting the world with an unprecedented challenge.
