Mark Gee is an engineer at Beck’s Hybrids and council adviser to the World Food Prize Foundation.
A deal to reopen the Strait of Hormuz could come any day, but damage to the global food supply has already been done. Roughly a third of the world’s seaborne fertilizer trade passed through the strait before the war in Iran stopped the flow entirely.
As a share of the global fertilizer market, what passes through the strait accounts for a small portion. But the price is set on the global export market, which means any disruption can have dire consequences for the global food supply.
If the closure of the strait continues into the summer, the World Food Program estimates that the number of people worldwide who face food scarcity could grow by 45 million. This deadline is especially acute for fertilizer, which must be applied at specific moments in the crop cycle. A delay of even a few weeks forces farmers to reduce application or abandon it altogether. Food prices are already rising, and crops planted with less fertilizer will produce smaller harvests in the fall. The suffering a food shortage could inflict will hit months after the news cycle has moved on.
This is not an isolated risk. The Strait of Hormuz is one of several global choke points in international trade. A disruption to any one of them can be devastating for the food system. When Russia launched its full-scale invasion of Ukraine in 2022, it affected Black Sea shipping routes, a critical export lane for the global wheat supply. The war caused a collapse in exports, and prices were soon 58 percent higher than the year before. Sanctions on Russia and Belarus then removed 40 percent of the world’s potash fertilizer from the market, and prices more than doubled.
These higher costs were felt all over the world, but some areas were hurt more than others. In developing countries, farmers who couldn’t absorb the costs simply used less fertilizer. This reduced yields, which made food even more expensive. The number of people at risk of hunger climbed from 193 million in 2021 to 258 million in 2022.
The modern agriculture system feeds 8 billion people and is astonishingly productive. It is also alarmingly fragile. Decades of optimizing for efficiency have left the world’s food dependent on a small number of routes, companies and inputs. In 2017, the British think tank Chatham House identified 14 trade choke points that handle over half the world’s grain and fertilizers. Nearly all of them have suffered a major disruption since the turn of the century.
The choke points are not limited to geography. Four companies process roughly 85 percent of the U.S. beef market. In 2021, a ransomware attack on the world’s largest meat-packer, JBS, shut down a quarter of American beef processing capacity for several days. Meat prices rose and the company paid an $11 million ransom.
A concentrated system is more efficient and makes food cheaper, but it sacrifices resilience in the process. A system with one major fertilizer corridor is cheaper than a system with three, but also more brittle. The world is now paying the bill for that trade-off.
Instead of waiting for the next supply shock, the global food system should be diversified as much as possible and fortified where it isn’t. That means rejecting the principle that every input must come from the cheapest source.
Some companies were already taking the initiative to diversify their supply chains before the closure of the strait. Last year, the fertilizer manufacturer CF Industries announced plans to build a new factory in Louisiana. Other companies have boosted production at existing plants to help make up for the decline in global supply.
In the United States, Congress should invest in the Mississippi River locks, the Pacific Northwest grain terminals, and the rail capacity connecting them, so a drought on one river or a closure at one port cannot strand an entire harvest. Antitrust enforcement against the meatpacking oligopoly would broaden supply chains while delivering better prices for farmers and consumers alike. The U.S. should also lead an international effort to expand fertilizer production capacity outside the Persian Gulf.
Fortifying vulnerabilities should include improving cybersecurity for agriculture infrastructure and repairing or replacing aging components to protect against weather-related disruptions. Net-importer countries should also establish strategic grain and fertilizer reserves to ensure a shipping disruption is more manageable and doesn’t lead to famine.
For wealthy countries, failure to prepare for another disruption in the food supply will mean higher prices and some empty grocery shelves. For the hundreds of millions of people who already live on the edge of food scarcity, the same scenario can cause starvation. Reducing the world’s reliance on these choke points would protect the food supply the next time global trade is under threat.
The post The global food supply is overly reliant on this one choke point appeared first on Washington Post.
