Iran war could push world into a food ‘catastrophe,’ UN agency warns – National

If the Iran war continues unabated, with the Strait of Hormuz blocked to all shipping traffic, the world could be heading towards a “global agrifoods catastrophe,” the UN’s Food and Agriculture Organization is warning.

“The clock is ticking,” FAO chief economist Maximo Torero said in a recent report.

Ships carrying critical agricultural supplies must start moving through the Strait of Hormuz as soon as possible to ward off the risks of a dangerous spike in food price inflation later this year, the FAO warned.

If the U.S.-led war in Iran continues, the protracted conflict “could trigger a cascade of effects similar to the aftermath of the COVID-19 pandemic crisis,” according to the FAO.

“We are in an input crisis; we don’t want to make it a catastrophe,” said David Laborde, director of FAO’s agrifood economics division.

“The difference depends on the actions we take,” Laborde added.

The “input crisis” refers, in particular, to the dwindling global supply of fertilizer.

The war is straining the supply of agricultural inputs, said University of Guelph food economist Mike von Massow.

“A significant volume of fertilizer comes through the Strait of Hormuz to the rest of the world, particularly nitrogen fertilizer, which is made with natural gas,” von Massow said.

While estimates differ widely, the FAO says the exports of 20 and 45 per cent of all the world’s key agrifood inputs rely on sea passage through the Strait of Hormuz.

The FAO said that while global food prices were relatively stable in March thanks to ample supplies of most food commodities, especially cereals, “pressure is rising in April.”

The pressure will only intensify if the conflict continues into May, the report warned, as “farmers will make decisions” on whether to switch to a different crop or adapt as fertilizer supplies run dry.

“Just like we’re seeing some countries right now having to ration gas because it is not coming through the strait, we will see some farmers not have any fertilizer at all. Then yields will go down, particularly in developing countries,” von Massow said.

“That could mean famine,” he added.

1:51
Food costs could start climbing as impact of war in Middle East begins to be felt elsewhere

The fertilizer shortage is putting the livelihood of farmers in developing countries — already troubled by rising temperatures and erratic weather systems — further at risk, and could lead to people everywhere paying more for food.

The poorest farmers in the Northern Hemisphere rely on fertilizer imports from the Gulf, and the shortage comes just as planting season begins, said Carl Skau, deputy executive director of the World Food Program.

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“In the worst case, this means lower yields and crop failures next season. In the best case, higher input costs will be included in food prices next year,” Skau said.

Nitrogen and phosphate — two major fertilizer nutrients — are under immediate threat from the closure of the Strait of Hormuz.

Supplies of nitrogen, including urea, the most widely traded fertilizer that helps plants grow and boosts yields, are the hardest hit because of shipping delays and the soaring price of liquefied natural gas, an essential ingredient.

The conflict has restricted about 30 per cent of global urea trade, said Chris Lawson of CRU Group, a London-based commodities consultancy.

According to a 2022 report, two-thirds of the world’s calories come from four staple foods: wheat, rice, maize and soybeans. At least 72 per cent of these crops are grown in just five countries: China, the United States, India, Brazil and Argentina.

This raises fears of global food insecurity when a crucial channel like the Strait of Hormuz is choked.

Some food producers may start to restrict exports as they struggle to produce enough food for their own populations, von Massow said.

“We saw it during the war in Ukraine. When there was less wheat available, countries like Argentina and India either curtailed, put quotas on exports or put a tax on exports,” he said.

In 2023, when India limited rice shipments to control domestic prices, it had an impact on food prices globally.

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Alberta farmers face uncertainty with rising fertilizer prices

A sharp jump in fuel and fertilizer prices has Canada’s agriculture producers engaged in a pricey game of chance.

Prices for diesel and fertilizer have nearly doubled since the war involving the U.S., Iran and Israel, as the stalemate has choked vital oil and gas shipments through the Strait of Hormuz.

Although North America’s farmers may be shielded from the worst impacts for now, said von Massow.

“Fortunately, most farmers in North America pre-book their fertilizer in the fall, so they will not be as affected this year. But in some places, if fertilizer prices go up significantly and there wasn’t pre-booking, they might cut back on fertilizer, which could harm yields,” he said.

But higher global fertilizer prices will also eventually hit Canadian farmers, he added.

Canadians are already grappling with higher food prices. Last week, Global News reported that some of Canada’s largest food suppliers informed their grocery retail clients that they will start charging a fuel surcharge as fuel costs weigh on them.

Food prices in Canada soared in March. The prices of food purchased from stores rose by 4.4 per cent in March, compared to 4.1 per cent in February.

Fresh vegetables saw the steepest increase, with prices for fresh vegetables rising 7.8 per cent in March. This was a significant increase compared to February, which barely saw any increase in the price of fresh vegetables (0.5 per cent).

This is the largest increase in the prices of fresh vegetables since August 2023, when they grew by 8.7 per cent.

— With files from The Associated Press and The Canadian Press