The interruption to supplies of fertiliser and its key ingredients due to the war in Iran could cost up to 10 billion meals a week globally and will hit poorest countries hardest, according to the boss of one of the world’s biggest fertiliser producers.
Svein Tore Holsether, chief executive of Yara, told the BBC that hostilities in the Gulf, which have blocked shipping through the Strait of Hormuz, are jeopardising global food production.
Reduced crop yields as a result of lower fertiliser use could lead to a bidding war for food, he warned.
He urged European nations to consider carefully the impact of a price war on the “most vulnerable” in other countries.
Although the UK is very unlikely to face food shortages, the increased costs facing food producers are expected to start showing up on weekly food bills in the next few months.
“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 said.
“What does that mean for food production? I would get to up to 10 billion meals that will not be produced every week as a result of the lack of fertilisers.”
Not applying nitrogen fertiliser would reduce crop yields for some crops by as much as 50% in the first season, Holsether said.
“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.”
Parts of the world where there is already under-fertilisation, such as several countries in sub Saharan Africa, could see an even larger impact on crop yields, he added, saying “significant drops” there were possible.
Planting seasons vary across the world. In the UK it is peak planting season, while in Asia farmers are getting started.
The consequences of fertiliser shortages in Asia will not appear in food prices until the end of the year, when harvests that should have been planted this spring come in smaller than they should, or not at all, according to analysts.
Professor Paul Teng, a senior fellow in food security in Singapore, said 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”.
Farmers around the world are facing a daunting series of challenges, Holsether said, as the prices they can command for the food they produce have not yet adjusted to cover the higher bills they are facing.
“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 said.
Bidding war
According to the United Nations, around a third of the world’s fertilisers – such as urea, potash, ammonia and phosphates – normally pass through the Strait of Hormuz.
The price of fertiliser has soared by 80% since the beginning of the US and Israel’s war on Iran.
A continuation of the conflict could result in a bidding war for food between richer and poorer nations, Holsether added.
“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?
“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.”
That had implications for “food affordability, food scarcity and hunger” the Yara boss said.
In the UK, the Food and Drink Federation recently forecast that food inflation could reach 10% by December.
