Food prices are likely to rise sharply due to reduced fertilizer availability. Normally, Mozambique imports fertilizers through the Strait of Hormuz – but that waterway is under Iranian control and the Iranians do not allow most shipping to pass through.
According to UNCTAD, in a document titled “Disruptions in the Strait of Hormuz: Implications for global trade and development”, rising food prices will also contribute to the general cost of living.
“The interruption of transit through the Strait of Hormuz could worsen access to fertilizers for some of the poorest countries”, the document reads.
The note highlights that, in 2024 alone, the country imported 22 percent of its fertilizers through the Strait of Hormuz.
“The escalation of the conflict affecting the Strait of Hormuz region is increasingly reflected in fertilizer markets, linking disruptions in energy and maritime transport to agricultural markets, future food supplies and trade”, reads the UNCTAD document.
The organization warns that increases in energy, fertilizer and transport costs – including freight – could increase food prices and intensify pressure on the cost of living, especially for the most vulnerable countries.
“When oil prices rise, food prices tend to rise accordingly, and when gas prices rise, fertilizer prices often rise,” the organization states.
“The effects are already visible. The prices of nitrogen-based fertilizers have increased significantly, with smaller but noticeable increases in phosphate fertilizers,” the document adds.
Fertilizer trade, the note says, is highly concentrated, increasing exposure to disruptions.
“The region’s role goes beyond energy. It is also a major producer of essential inputs, such as sulfur, used in phosphate fertilizers, and a central hub for the global fertilizer trade. Around a third of global fertilizer volumes transported by sea pass through the Strait”, highlights the document.
According to UNCTAD, one third of the world’s maritime fertilizer trade passes through the Strait of Hormuz, totaling around 16 million tons of fertilizers imported by several Persian Gulf countries through this channel, of which 67 percent is urea, 20 percent diammonium phosphate, 9 percent monoammonium phosphate, and the remaining 4 percent other types of fertilizers.
The Strait of Hormuz, which connects the Persian Gulf to the Gulf of Oman, is also the transport route for around 20% of the oil traded worldwide and a significant part of the liquefied natural gas transported by sea.
(AIM)
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