“We have a few weeks to avoid what will probably be a major humanitarian crisis,” warned Jorge Moreira da Silva, head of a UN task force responsible for freeing up the passage of fertilizers through the Strait of Hormuz on Monday, May 11th. In addition to oil and gas products, fertilizers produced by Persian Gulf countries have also been blocked for over two months.
The former Portuguese MEP believes that “we could be witnessing a crisis that will push an additional 45 million people into hunger.”
Iran is indeed blocking this strategic passage in retaliation for the war initiated by the United States and Israel on February 28th. It usually handles “one third of the world’s fertilizer trade by sea,” which amounts to nearly 16 million tons. The Persian Gulf region is one of the world’s leading producers, supplying “30 to 35% of the world’s urea exports,” the most widely used fertilizer, and approximately “20 to 30% of ammonia exports,” according to a note from the Food and Agriculture Organization of the United Nations (FAO).
If ships carrying these resources around the world are blocked, production sites themselves have been affected by the war: the Qatari refinery in Ras Laffan and its ammonia factory were struck on March 2nd. Factories in the United Arab Emirates, Saudi Arabia, Iran, Jordan, and Qatar have suspended or reduced their production.
The Persian Gulf is also a crucial transit point for raw materials such as sulfur and ammonia, which allow other countries to manufacture their own fertilizers. This includes countries like Morocco, Tunisia, and South Africa, which have had to reduce their production since the conflict began. According to the International Food Policy Research Institute (IFPRI), “liquefied natural gas, from which 20% of the world’s trade originates from the Gulf countries, is also the main source of energy for ammonia production, a key component of all nitrogen fertilizers.”
“In India, some urea producers have started to reduce their production,” and “in Pakistan, the gas supply to some fertilizer plants has been suspended,” reports the French Treasury Directorate.
“Unlike oil, there is no internationally coordinated strategic reserve for fertilizers. When the supply is disrupted, it remains so,” notes Jaron Porciello, a researcher at Cornell University (USA), on The Conversation website.
Given these disruptions in global fertilizer supply, which countries are most affected and vulnerable? To answer this question, David Laborde, director of the FAO’s agri-food economics division, suggests asking three other questions: “Does the country use a lot of fertilizers? Are these fertilizers imported? Do these imports come from the Gulf?” The region is a major supplier for many countries in Africa, Asia, and Latin America.
“Many African economies are heavily dependent on fertilizers imported from Gulf producers,” emphasizes the FAO. For example, Sudan imports 54% of its fertilizers, Tanzania 31%, Somalia 30%, Kenya 26%, and Mozambique 22% from the Gulf, according to the UN. “Malawi is one of the African countries that uses the most fertilizers. It depends on almost 100% of imports, 60% of which come from the Gulf,” adds David Laborde.
The stakes on the continent are enormous: the agricultural sector is “dominated by small-scale farmers with limited capacity to absorb increases in input costs or supply disruptions,” notes the journal Le Grand Continent.
Asian countries are also among the most severely affected. Jordan imports 79% of its fertilizers from the Persian Gulf, Bangladesh 53%, Sri Lanka 36%, and Pakistan 27%. As for India and China, they each import around 20% of their fertilizers, according to the UN. Their situation is particularly risky as these countries practice intensive agriculture, applying large amounts of fertilizers per hectare.
“Delayed or inadequate deliveries could result in reduced yields of staple crops such as rice, wheat, and maize later in the year,” warns the FAO. “This poses a particularly serious risk for densely populated regions of Asia, where these crops constitute the majority of food consumption and are essential for food security.”
Experts also mention Brazil, a major exporter of soybeans, corn, and sugar, which sources one-fifth of its fertilizers from the Gulf. “If Brazilian farmers reduce their use of fertilizers, agricultural yields will inevitably decline, with consequences for global food markets,” warns the FAO.
“In India, which has heavily subsidized fertilizer purchases for fifty years, it has been realized that its fiscal capacity cannot be extended indefinitely, and Prime Minister Narendra Modi has called for agriculture that uses fewer fertilizers,” assures David Laborde. In Bangladesh, the newspaper The Daily Star reports that the country has launched a tender to find other fertilizer suppliers, such as Brunei, Malaysia, Vietnam, or Russia. Brazil, on the other hand, is in negotiations with Indonesia, according to the IFPRI.
Jorge Moreira da Silva, from the UN task force on fertilizer passage, advocates for an agreement between conflict parties that would allow the passage of five ships loaded with fertilizers and related raw materials per day. However, “even if the war were to stop now, there is inertia,” laments David Laborde. “A number of actors have waited to place new fertilizer orders. Everyone will arrive in the market at the same time, further contributing to price increases.”
And two uncertainties will remain: “To what extent have fertilizer production capacities been affected by the strikes? And if we need to compensate for three months during which we did not produce, how are we going to send the fertilizers to their destination? We do not have three times more boats.”
