“Temporality matters a lot right now and time is ticking very hard, and I think we need to find a solution as soon as possible,” he said by video conference from Rome.
‘Double shock’ for farmers
Since the war broke out, oil tanker traffic in the Strait of Hormuz has decreased by more than 90 percent.
Normally, 35 percent of the world’s crude oil flows – 20 million barrels – along with 30 percent of the fertilizer trade, and a fifth of liquefied natural gas passes through the critical shipping corridor each day.
As a result, farmers face “a double shock” caused by rising prices of fertilizers and fuels, both essential for agricultural production.
Concern for consumers
If a solution is found soon, markets could stabilize in about three months, but the outlook changes if the crisis continues.
“The medium-term scenario of a three-month lockdown will affect all farmers globally, and then we will have different elements that could mainly impact the next season,” he said, pointing to reduced crop yields and substitutions.
The situation could also lead to competition from the biofuels sector, particularly if oil prices rise above $100 a barrel. Although farmers would benefit, “it will be bad for consumers because prices will increase.”
Vulnerable nations
In the short term, the priority should be on countries like Sri Lanka and Bangladesh, where rice is now being harvested.
African nations that rely on fertilizer imports are also vulnerable, he said, although “large exporters” such as Argentina, Brazil and the United States will also be affected.
As for the Gulf, Torero noted that food prices are already “skyrocketing” in Iran. Although the country produces about 70 percent of its own supply, the rest is imported.
Meanwhile, “large food importers” like Qatar and the United Arab Emirates will face challenges because no ships will go to the region.
Gulf countries also host millions of migrant workers from South Asia and East Africa and remittances sent to their home countries could decline if the conflict continues.
Solutions are needed now
To mitigate the crisis, Torero highlighted the need to find alternative maritime routes in the short term.
“We need to provide emergency support to the balance of payments of import-dependent nations before opening windows,” he added.
In the medium term, countries must diversify sources of fertilizer imports, strengthen the exchange of regional reserves and avoid restrictions on exports, while in the long term it will be essential to increase resilience.
“We need to give food systems the same strategic importance as the energy and transportation sectors, investing accordingly to minimize those impacts,” he concluded.