The tension currently going on in West Asia is no longer just a dispute over borders. This is fast turning into a global food crisis, the heat of which is going to reach your kitchen very soon. According to the World Food Program (WFP), if this war continues till June, an additional 45 million people around the world will become victims of severe hunger. This figure will also cross the existing scary record of 31.9 crores.
How kitchen prices are increasing due to Iran war
At the center of this entire crisis is the Strait of Hormuz, which is one of the most important maritime trade routes in the world. Since the American-Israeli attacks that began on February 28, humanitarian aid and trade routes have been choked here. 20% of the world’s oil and gas passes through this narrow path. Crude oil prices have crossed $ 100 per barrel after indications that Iran is almost ‘closing’ this route. Due to security reasons, ships are being sent through long routes, due to which freight transportation has become expensive by 18%. The cost of crude oil directly means an increase in the cost of running tractors in the fields, irrigating the fields and transporting grains to the markets.
The real villain is not crude oil, but urea
According to a news from Money Control, this war may focus on oil prices, but the biggest and hidden threat to food security is the fertilizer crisis. Almost half of the urea used worldwide reaches the world from the Gulf countries via the Strait of Hormuz. Qatar alone contributes 14% of the world’s total urea production.
Qatar has stopped production at its huge urea factories due to the supply of Liquefied Natural Gas (LNG) being affected. Due to this shortage of gas, India has also had to reduce the production of many of its urea plants, because the availability of gas here has fallen by 70%. In the neighboring country Bangladesh, many factories have been closed due to gas rationing. Due to which the export prices of urea from the Middle East have increased by 40% in recent weeks and have become 60% more expensive than last year.
The crisis has come at the wrong time
This crisis has come at the most wrong time for the world. The main sowing season is currently underway in the Northern Hemisphere (mid-February to early May). At this time, farmers need fertilizers the most for good crop yield. What will farmers do when fertilizer becomes twice as expensive or is not available in the market? Under compulsion they will reduce the use of fertilizer. This will have a direct impact on the production of our basic crops like rice, wheat, maize and soybean.
India, which sources more than 40% of its fertilizers from the Middle East, is a major exporter of rice and wheat. Brazil is completely dependent on imported fertilizers for its soybeans. Even a slight decrease in the agricultural produce of these countries will shake the food market of the entire world.
Inflation bomb can explode any time
The ultimate burden of increasing farming costs and decreasing grain production falls on the common consumer. When the production of wheat and rice decreases, there will be a shortage in the market and prices will skyrocket. In large economies like India, there will be a heavy burden on the government of fertilizer subsidy, which will ultimately result in inflation. Global food supplies were already under pressure due to the Russia-Ukraine war and now this new crisis has brought a weak system to the brink of collapse.