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

United Nations Food and Agriculture Organisation (FAO) warned that the closure of the Strait of Hormuz had gone beyond a temporary shipping disruption, signalling the beginning of a systemic agrifood shock.

FAO said the situation could trigger a severe global food price crisis within six to 12 months if alternative trade routes were not explored.

The UN agency stated that the shock was already 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 also restraint on export restrictions, protection of humanitarian flows, and buffers to absorb higher transport costs.

In a podcast published on Wednesday, FAO’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”.

Torero said that would involve exploring “intervention by governments, by international financial organisations, by 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.”

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.

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.

Director of FAO’s Agrifood Economics Division, David Laborde explained that mitigating the effects would require shifting to alternative land and sea routes, including via the eastern Arabian Peninsula, western Saudi Arabia, and the Red Sea.

It admitted that those routes had limited capacity, making it critical to avoid export restrictions by major producers.

Torero said exploring the alternative routes was especially critical for safeguarding humanitarian food flow.

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.

They included rapidly securing alternative land and sea corridors to bypass Hormuz. The agency, however, acknowledged that this could not resolve the magnitude of the input supply shock, but would help to marginally reduce it.

The UN agency also proffered the avoidance of export restrictions, especially on energy, fertilisers, and input; exemption of food aid from trade curbs; promotion of emergency interventions; intercropping (cereals + legumes) to cut nitrogenous fertiliser use; and provision of major nutritional, environmental, economic, and agronomic benefits.

It equally recommended the activation of social protection programmes, drawing on lessons from Latin America; avoidance of blanket subsidies, which created significant fiscal pressures and tended to be regressive; prioritising targeted support for the most vulnerable through digital registries that could efficiently direct assistance to vulnerable rural households and smallholders, particularly in Africa.