The ongoing conflict in the Gulf region, particularly the hostilities involving Iran, is severely disrupting the global supply of fertilizers and their essential components. This disruption threatens the production of billions of meals weekly and is poised to disproportionately affect the world's poorest nations, according to Svein Tore Holsether, the chief executive of Yara, one of the largest fertilizer producers globally.
Holsether explained to the BBC that the blockage of shipping routes through the Strait of Hormuz, a critical transit point for global trade, is jeopardizing the entire food production system. He cautioned that a reduction in the use of fertilizers, a direct consequence of supply chain issues and increased costs, could lead to a global bidding war for food. This scenario, he urged, should be carefully considered by European nations, particularly regarding its impact on the most vulnerable populations in other countries.
While the United Kingdom is unlikely to experience widespread food shortages, consumers can anticipate higher food prices in the coming months as producers grapple with increased operational costs. "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," Holsether stated. He quantified the potential impact on global food supply, estimating that "up to 10 billion meals that will not be produced every week as a result of the lack of fertilisers."
Nitrogen fertilizer plays a crucial role in enhancing crop yields. Holsether indicated that foregoing its application could lead to a significant decrease in yields, potentially by as much as 50% for certain crops within the first season. The global nature of the fertilizer market means that these shortages will have far-reaching consequences. "The fertiliser market is very global so these parts are moving across the planet, but the main destinations would be Asia, South East Asia, Africa, Latin America where you would see the most immediate impact from this," he elaborated.
Regions already struggling with under-fertilization, such as several countries in sub-Saharan Africa, are particularly vulnerable. Holsether warned of the possibility of "significant drops" in crop yields in these areas. The timing of planting seasons worldwide adds another layer of complexity. While it is peak planting season in the UK, farmers in Asia are just beginning their preparations. Consequently, the effects of fertilizer shortages in Asia may not be reflected in food prices until the end of the year, coinciding with harvests that were planted in the spring.
Professor Paul Teng, a senior fellow specializing in food security in Singapore, echoed these concerns. He noted that while some nations might have sufficient fertilizer for the immediate planting season, a prolonged crisis could impact staple crops like rice in the coming months. "some countries might have enough fertiliser for the immediate planting season 'but if the crisis drags on any longer, we will be seeing impact on crops such as rice in the coming months'," Teng said.
Farmers worldwide are facing a confluence of challenges, according to Holsether. The prices they receive for their produce have not kept pace with the escalating costs of essential inputs. "They're faced with higher energy costs, diesel for a tractor is increasing, other inputs for the farmers are increasing, fertiliser cost is increasing, but yet the crop prices haven't increased to the same extent yet," he explained.
Approximately one-third of the world's fertilizer supply, including key components like urea, potash, ammonia, and phosphates, typically transits through the Strait of Hormuz, according to United Nations data. The price of fertilizer has already surged by 80% since the commencement of hostilities involving the US and Israel in the region. Holsether warned that a sustained conflict could trigger a competitive bidding war for food supplies between wealthier and less affluent nations.
"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, OK, in that situation, who are we buying the food away from?" Holsether posed. "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." He stressed that this situation has significant implications for "food affordability, food scarcity and hunger."
In the UK, the Food and Drink Federation has projected that food inflation could reach 10% by December. The Bank of England recently revised its forecast, anticipating food price inflation to climb to 4.6% in September, with potential for further increases later in the year. The UN World Food Programme estimates that the cumulative impact of the Middle East conflict could lead to an additional 45 million people facing acute hunger by 2026. The Asia and Pacific region is expected to see a 24% rise in food insecurity, representing the most substantial relative increase globally.
