In case you missed it — it’s been a hectic period for headline bombs lately — MainFT has published a fantastic read on the next big disaster that might result from the war on Iran: a global food crisis.
Since Iran choked off the Strait of Hormuz, a critical shipping route through the Gulf, attention has centred on the risk to oil flows. The threat to food security, however, may be just as grave a risk.
“You can live without your fridge or without your car for a while,” says Michael Werz, a senior fellow at the Council on Foreign Relations. “You cannot live if you do not have food staples.”
The impact on the global food system caused by the Iran war could be even bigger than the crisis triggered by Russia’s 2022 full-scale invasion of Ukraine, experts say.
That is a particularly serious concern for the world’s poorer countries, but the longer the conflict lasts, the more severe the food shock will become and the more people will be affected.
As Alphaville has written before, not all inflation shocks are created equal. Some specific products are so influential for other even seemingly unconnected goods that they are “systemically significant” — and energy is the prime example. It is an input into so many things.
But the most important dependency may be agriculture. The Gulf is a major fertiliser exporter to the entire world. Many Asian countries also use gas from the Gulf to manufacture fertiliser. Plus, higher energy prices increase the costs moving and processing food (and mounting shortages could soon imperil the ability to even do so).