Urgent action is needed to avert a serious agrifood crisis in the next six to 12 months due to the conflict in the Strait of Hormuz, the United Nations (UN)’s Food and Agriculture Organization (FAO) says.
The closure of the strait was not a temporary shipping disruption but the start of a systemic agrifood shock that could trigger a global food price crisis, the FAO said on 20 May.
Avoiding such an outcome will require alternative trade routes, restraint on export restrictions, protection of humanitarian flows and buffers to absorb higher transport costs, according to the organisation.
The time has come to “start seriously thinking about how to increase the absorption capacity of countries, how to increase their resilience to this choke, so that we start to minimise the potential impacts,” Maximo Torero, chief economist of the FAO, said in a new podcast.
This would involve exploring “intervention by governments, international financial organisations, the private sector, and by UN agencies and other research centres to try to help countries to be able to cope better with the current situation,” Torero added.
The FAO said the window for preventive action was closing quickly, with decisions taken now by farmers and governments on fertiliser use, imports, financing and crop choices determining if a severe global food price crisis emerged within six to 12 months.
Citing the FAO Food Price Index, which tracks monthly changes in the international prices of a basket of globally traded food commodities, the organisation said the impact was already visible. The FFPI rose for a third consecutive month in April, driven by high energy costs and disruptions linked to the conflict in the Middle East.
The shock was unfolding in stages: energy, fertiliser, seeds, lower yields, commodity price increases, then food inflation, the FAO said.
Mitigating these impacts would require shifting to alternative land and sea routes, including via the eastern Arabian Peninsula, western Saudi Arabia and the Red Sea, said David Laborde, director of FAO’s Agrifood Economics Division.
However, these routes had limited capacity, making it critical to avoid export restrictions by major producers.
This was particularly critical for safeguarding humanitarian food flows, Torero added.
With forecasts of El Niño weather conditions across several regions potentially bringing droughts and disrupted rainfall and temperature patterns, the situation could worsen.
FAO has set out a series of policy recommendations designed to deal with the Strait of Hormuz crisis.
Short-term recommendations included: rapidly securing alternative land and sea corridors to bypass the Strait of Hormuz; avoiding export restrictions, particularly on energy, fertilisers and inputs; and exempting food aid from trade curbs.
The FAO’s medium-term recommendations included: avoiding boosting biofuel demand during shortages to limit food-fuel competition; ensuring energy policy responses do not exacerbate food crises; and expanding affordable credit for farmers and agribusinesses.
Long-term recommendations included: diversifying ports, corridors, storage and logistics systems globally to reduce chokepoint risks in the future; building regional reserves and warehousing capacity to strengthen future shock absorption; and improving the resilience of domestic and cross-border transport systems.
