Hormuz: FAO Calls for Alternative Trade Routes to Avert Imminent Global Food Crisis

*Urges govts, World Bank, IMF, others to help countries cope with current situation

Ndubuisi Francis in Abuja

The United Nations Food and Agriculture Organisation (FAO) has warned that the
closure of the Strait of Hormuz has gone beyond a temporary shipping disruption , signalling the beginning of a systemic agrifood shock that could trigger a severe global food price crisis within six to 12 months if alternative trade routes were not explored.
The UN agency noted that the shock was alteady unfolding in stages vis-a-vis energy, fertiliser, seeds, lower yields, commodity price increases, and food inflation
FAO said avoiding a global food price crisis would not only require alternative trade routes outside Hormuz but restraint on export restrictions, protection of humanitarian flows and buffers to absorb higher transport costs.

In a podcast published on Wednesday, the UN agency’s Chief Economist, Maximo Torero said it was time 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.”

This involves exploring “intervention by governments, by international financial organisations, by the private sector, and by UN agencies and other research centers to try to help countries to be able to cope better with the current situation.”
FAO stated that the window for preventive action was closing quickly, adding that decisions taken now by farmers and governments on fertiliser use, imports, financing and crop choices will determine whether a severe global food price crisis emerges within six to 12 months.

The FAO Food Price Index, which tracks monthly changes in the international prices of a basket of globally traded food commodities, rose for a third consecutive month in April, driven by high energy costs and disruptions linked to the conflict in the Middle East, indicating that the impact is already visible.

According to the agency, the window for preventive action is closing quickly, noting that decisions taken now by farmers and governments on fertilizer use, imports, financing and crop choices will determine whether a severe global food price crisis emerges within six to 12 months.

But the Director of FAO’s Agrifood Economics Division, David Laborde explained that 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.
However, it admitted that these routes have limited capacity, making it critical to avoid export restrictions by major producers.

This is especially critical for safeguarding humanitarian food flows, Torero added.
The situation could worsen with the onset of El Niño, which is expected to bring droughts and disrupt rainfall and temperature patterns across several regions, the UN agency added.

FAO proffered a number of policy

recommendations designed to deal with the Strait of Hormuz crisis, including short-term, medium-term and long-term solutions
These include rapidly securing alternative land and sea corridors to bypass Hormuz, however, acknowledging that this cannot resolve the magnitude of the supply shock of input but will help to marginally reduce it.

The UN agency also proferred the

avoidance of export restrictions, especially on energy, fertilizers and input, exempt food aid from trade curbs, and promote in emergency interventions intercropping (cereals + legumes) to cut nitrogenous fertilizer use and provide major nutritional, environmental, economic, and agronomic benefits.

It equally recommended the activation of social protection programmes, drawing on lessons from Latin America, avoid blanket subsidies, which create significant fiscal pressures and tend to be regressive; but instead, prioritise targeted support for the most vulnerable through digital registries that can efficiently direct assistance to vulnerable rural households and smallholders, particularly in Africa.