As the conflict in the Middle East intensifies, the United Nations has urged countries not to restrict the transportation of energy and fertilizers, warning that such restrictions in the past have exacerbated the global surge in food prices.
The Food and Agriculture Organization of the United Nations said that agricultural inputs must resume flowing through the Strait of Hormuz “as soon as possible” to prevent the current situation from deteriorating. The organization called on all countries to take action, including “seriously considering” biofuel mandates and “avoiding export restrictions on energy and fertilizers”.
“We are facing an investment crisis; we do not want it to turn into a disaster,” said David Laborde, Director of the Agricultural and Food Economics Division of the Food and Agriculture Organization of the United Nations. “The success or failure depends on the actions we take.”
Since the outbreak of the war in late February, trade through the Strait of Hormuz has largely come to a standstill. With the Trump administration beginning to impose a full-scale maritime blockade, trade could be completely disrupted. The situation has become increasingly urgent as about one-third of the world’s fertilizer supply passes through this vital passage.
Countries have begun to compete to protect their domestic farmers’ supply of fertilizers. Major producers have restricted exports, while buyers have formulated financing plans and paid premiums to compete for the limited products.
According to a report by Bloomberg last week, China plans to halt the export of sulfuric acid starting from May. Before the conflict broke out, China had already begun to restrict the export of phosphate to ensure domestic supply. Russia has also temporarily halted the export of ammonium nitrate, a type of nitrogen fertilizer. CF Industries Holdings, a US-based company, said in late March that it had “turned down new high-priced export orders for this planting season” to ensure more nitrogen fertilizer supply for US farmers.
“Time is tight,” said Maximo Torero, chief economist of the UN Food and Agriculture Organization, adding that poorer countries are most vulnerable to higher and harder-to-find inputs.
The agency also called on international institutions such as the International Monetary Fund to consider providing financing for countries at risk of fertilizer supply shortages. The FAO said it has drawn up a list of countries based on their planting seasons and the amount of fertilizer needed.
The Food and Agriculture Organization (FAO) said that although the food price index remained stable in March, it is expected that price pressure will increase further as farmers adjust their planting decisions based on the supply of fertilizers.
According to Bloomberg Green Markets, the spot price of granular urea, a type of nitrogen fertilizer, in the Middle East has risen by 70% since the conflict broke out. The ongoing war also threatens the supply of phosphate fertilizers, as global production of phosphate fertilizers relies on sulfur supplies from the Gulf region.
