The Food and Agriculture Organization of the United Nations (FAO) warned on Wednesday that a prolonged closure of the Strait of Hormuz would cause a structural shock to the agricultural food sector, potentially leading to a severe crisis in global food prices within 6 to 12 months.
To avoid this outcome, the FAO recommended “establishing alternative trade routes, adjusting export restrictions, protecting humanitarian aid flows, and building reserves to contain rising transport costs.”
“It is time to start thinking seriously about how to increase countries’ ability to adapt to the repercussions, and how to strengthen their resilience in the face of this obstacle, in order to reduce the potential impacts,” said Maximo Torero, FAO’s chief economist, in a new podcast on Wednesday.
The FAO stated that the time available to take proactive measures is rapidly diminishing, noting that the decisions currently being made by farmers and governments regarding fertilizer use, imports, financing, and other factors will determine whether the world will experience a severe crisis in global food prices within six to twelve months.
In April, the FAO Food Price Index, which tracks monthly changes in global prices for a basket of internationally traded food products, rose for the third consecutive month, driven by higher energy costs and conflict-related disruptions in the Middle East.
The effects of the shock extend through successive stages: energy, fertilizers, seeds, reduced crop yields, higher commodity prices, and then food inflation, according to the FAO.
The situation could worsen with the arrival of the El Niño phenomenon, which is expected to cause drought and disrupt the balance of rainfall patterns and temperatures in several regions, according to the FAO.
To reduce this risk, the FAO recommended more than twenty short, medium and long-term measures, including alternative routes around the Strait of Hormuz, providing concessional loans to farmers, and establishing regional reserves.