Hormuz Gridlock Risks Global Food Crisis, International Chamber of Commerce Chief Says
Disruptions to a vital shipping route in the Middle East have created an energy shock. Now, a global food security crisis is brewing, warns the secretary-general of the International Chamber of Commerce.
The monthslong conflict between Iran and the U.S. has curbed the flow of goods through the Strait of Hormuz, a waterway many countries rely on for imports of critical inputs like fertilizers and natural gas.
Focus has been on the resulting rise in oil prices, but it is potential food shortages the world should be paying attention to, said ICC secretary-general John Denton.
“People see this fundamentally through the prism of the battle between U.S. and Iran which is in a way theatrical, it is so overpowering,” Denton said. “The story which is the killer…is the fertilizer story.”
About one-third of global fertilizer shipments pass through the narrow waterway, creating potentially catastrophic knock-on effects for agricultural producers.
Available fertilizer capacity has fallen by nearly 40% since the strait was disrupted, removing 2.7 million tons from the market, said Denton, who sits on a United Nations taskforce attempting to broker a solution to unblock the Strait.
If no progress is made, prices of food staples will soar, with Denton estimating an up to 80% increase in cereal prices.
Developing and emerging economies will feel the hit first. Countries like the Philippines, which imports roughly 90% of its fertilizers, are particularly vulnerable.
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