Industry has heard from fertiliser producer Yara’s chief executive that the war in Iran could threaten global food production as fertiliser supply sees disruption.
According to the Food and Agriculture Organization of the United Nations (FAO), the Strait of Hormuz carries approximately 20 million barrels of oil per day under normal conditions, as well as “significant volumes” of liquefied natural gas and vital fertilisers. However, it said that following the war, tanker traffic through the Strait has collapsed by over 90%, which it said had effectively closed it.
FAO Director-General Qu Dongyu said that the fertiliser market had experienced “immediate shocks”, with prices of Middle Eastern granular urea rising nearly 20% within a week. By mid-April, urea prices increased by 52% in the United States and 60% in Brazil, and an estimated 1.5 to 3 million tons of fertiliser trade per month have been delayed, which Dongyu said would jeopardise agricultural productivity.
Speaking to the BBC, Svein Tore Holsether, chief executive of fertiliser company Yara stated: “We’re up to half a million tons of nitrogen fertiliser not being produced in the world right now because of the situation we are in.
“What does that mean for food production? I would get to up to 10 billion meals that will not be produced every week as a result of the lack of fertilisers.”
Holsether called for the effects of the price rises to be considered by European nations, highlighting that food costs would continue to rise over the coming months.
Holsether told journalists: “If there’s a bidding war on food and one that Europe is robust enough to handle, what we need to keep in mind in Europe is, okay, in that situation, who are we buying the food away from?
“That is a situation where the most vulnerable people pay the highest price for this in developing nations where they cannot afford to follow that.
Disruptions “felt across global markets”
Dongyu said a “coordinated policy response is urgently needed”, highlighting that the FAO’s immediate measures over the next 90 days would include: developing alternative trade routes; enhancing market monitoring; avoiding export restrictions on energy and fertilisers; and providing financial support for farmers.
Dongyu stated: “We have the technical expertise; what we need now are the resources to act – in line with our mandate – before this closure has a catastrophic impact on our agrifood systems and on food security globally.”
A spokesperson for Yara stated: “The region plays a critical role in global fertiliser and energy markets, and the situation is putting significant pressure on the global food system, with knock-on effects across the value chain, including increasing challenges to farmer affordability.
“The Strait of Hormuz is a key transit route for ammonia, urea and other essential agricultural inputs. While exposure varies by region, disruptions are felt quickly across global markets and by farmers everywhere.
“Fertilisers are fundamental to global food production – roughly half of global food production depends on them. Stable, affordable access is critical for farmers to produce the food the world needs.”
