The United Nations’ Food and Agricultural Organisation (FAO) has called for the prompt reopening of the Strait of Hormuz to prevent a global food catastrophe. Traffic through Hormuz has fallen by more than 95 per cent, disrupting both energy and fertiliser exports and boosting costs.
Why is the FAO pressing for prompt action?
The closure of the strait denies farmers fuel and fertilisers in advance of the spring sowing season. This risks a dangerous fall in worldwide food production and sharp spike in prices. FAO chief economist Maximo Torero said: “The last thing we want is lower crop yields and higher commodity prices and food inflation.”
Why does the closure of Hormuz affect food security?
Exports of between 20-45 per cent of agricultural nutrients pass through the Strait of Hormuz. Disruptions to fertiliser supplies risk reducing production, yields and food availability. Beyond the Gulf, fertiliser producers are being denied key ingredients because of the restrictions in the strait.
Where are fertilisers produced in the Gulf?
The main producers are Saudi Arabia, Qatar, Oman, Bahrain and the Emirates. Their biggest customers are India, Brazil and Australia. The presence of natural gas and oil in these Gulf countries is crucial to the production of nitrogen fertilisers. Nearly half of the world’s most widely used nitrogen fertiliser, urea, and large amounts of other fertilisers are exported by Gulf countries.
READ MORE
What has been the consequence of the closure of Hormuz?
Oil, natural gas and petrol prices have doubled in Europe and Asia. Petrol prices have risen by more than 30 per cent in the United States.
Why has Hormuz been closed?
In response to the US-Israeli war on Iran, Tehran has denied passage through Hormuz to ships it considers to be flagged by “enemy countries”.
What has been the result?
Disruption has driven up transport and operational costs. Freight rates for oil tankers have increased by more than 90 per cent since the end of February. War-risk insurance policies have risen dramatically while some insurers have refused coverage for ships plying in the Gulf.
What are the prospects?
Global trade in goods and services grew by $2.5 trillion (€2.1 trillion) in 2025 to $35 trillion, but the outlook has become increasingly uncertain, according to the UN Global Trade Update. While developed economies can absorb reverses, developing countries are faced with higher costs of imports, increasingly stringent financial conditions and reduced capacity to sustain growth.
How can this be avoided?
To an extent, this can be averted if advanced economies strengthen co-operation with developing countries and ensure their full participation in global trade.