The Next Shock After Oil: How the Iran War is Reshaping the Global Food Supply – Let’s file this next one under “More Tales from the Golden Age.” A spate of recent reports tracking the economic implications of the Iran War highlights just how bad the global economic situation is becoming.
By the way, the Strait of Hormuz has not been fully reopened. And as we’ve been warning you in this publication, the longer the Strait remains blocked, the worse the global economic fallout from the war will be.
The blockade exacerbated some significant negative trends that were already taking shape throughout the global economy, specifically in the vital agricultural industry, before the conflict erupted between the US, Israel, and the Islamic Republic of Iran on February 28.
One-third of the world’s key fertilizer exports were disrupted because of the Iranian blockade of the Strait of Hormuz. Fertilizer prices surged in response to that unanticipated event. Countries scrambled to secure supplies as the world entered the all-important planting season.
Some analysts have sounded a hopeful note.
After all, shipping through the Strait of Hormuz has resumed (again, not yet at prewar levels). Because the market is buying into that hopeful tone, fertilizer prices have fallen from their peak. They have, however, not returned to their prewar normal. There’s a chance they might not return to their norms, too.
Why Timing Matters More Than Price
In life, timing is everything. In global economics and supply chains, timing is essential. It’s the difference between success and failure; between making money and losing everything. For decades, global supply chains have operated on the precarious principle of “Just-In-Time.”
As in, businesses have perfected their actuarial tables for managing their cash flows, and the global supply chain has become so precise that those businesses often lack backup supplies or fallback positions if everything goes upside down.
Since farming is not only dependent on global economics and trade but is also a biological process–the act of growing food–even the slightest disruptions could lead to Famine. Many farmers often purchase fertilizer months before harvest.
By the time prices exploded following the outbreak of war in the Middle East, many farmers had already reduced fertilizer applications. Indeed, some delayed purchases of their fertilizer supplies. Others, meanwhile, accepted sharply higher costs–and that means lower yields.
Remember, this is a biological process. Once decisions on fertilizer availability and prices are made before the planting season, they cannot be reversed. Crops fertilized lead to lower food production. That’s why lower fertilizer prices today do not mean food will be cheaper. In fact, the food we purchase at our local grocery stores, which has already been high, will either remain high or be slightly higher.
America Escapes the Worst–For Now
Here’s some good news for us Americans. Farmers here in the United States entered this year’s disrupted planting season in a stronger position than farmers in much of Asia or Africa because many American producers had already locked in fertilizer purchases before the crisis escalated.
Even so, farmers who bought later faced substantially higher costs, squeezing already-thin margins.
The Global South Faces the Greatest Danger
People living in South Asia and Africa, however, are not as lucky. Indeed, the farmers of these regions are heavily dependent on imported fertilizer. And many governments in those developing regions cannot afford subsidized fertilizer purchases, raising the risk of reduced food production, higher import fees on agricultural products, and worsening food insecurity. So, many parts of the world–notably in the Global South–are facing down the prospect of potential Famine.
Famines not only bring tragedy in the form of starving children but also increase disease. What’s more, they cause all manner of geopolitical instability. Throughout the 1980s and 1990s, Famine caused much of Africa’s worst excesses of starvation-related warfare and human rights abuses.
There are already major concerns about regions like Sub-Saharan Africa, which struggles to support its oversized youth population. Should Famine erupt there because of knock-on effects from the Iran War, it might set the region aflame with geopolitical instability the likes of which Africa has not experienced in decades.
Famine Creates Migration
All that will create what my colleague, the independent war correspondent Michael Yon, refers to as “human osmotic pressure.” Famine creates mass migration.
And that mass migration will be directed directly at the Global North, including Europe, the United Kingdom, Canada, and the United States. That, too, will fundamentally disrupt the political stability and prosperity of the Global North at a time when those things are already under pressure.
The Iran War did not simply threaten oil supplies. It also disrupted one of the world’s most important agricultural supply chains.
Nearly 20 percent of the world’s natural gas passes through the Strait of Hormuz. Natural gas is a feedstock for nitrogen fertilizer, while Gulf countries export enormous quantities of fertilizer and fertilizer ingredients. Disruptions to Gulf energy and shipping, therefore, ripple throughout the global architecture.
The Real Crisis Is Still Ahead
In other words, the real danger isn’t even higher grocery prices for ordinary Americans (which is bad enough). It’s the delayed consequences of missed planting windows and reduced fertilizer use, with higher grocery prices just one of many downsides.
So, the fertilizer crisis is no longer primarily about whether farmers can purchase fertilizer. It’s about whether enough fertilizer was applied when it matters–during the planting season. If not, the effects will appear later, in the form of tighter food supplies and higher prices, rather than empty fertilizer warehouses.
It may appear as more uncontrolled waves of mass migration from starving regions into regions perceived to have greater food bounties. Like the disruptions caused by the pandemic shutdowns, the world will be dealing with fallout for years to come.
And, like pandemic disruptions, we may never fully get back to the way things were before that crisis erupted.
About the Author: Brandon J. Weichert
Brandon J. Weichert is Senior National Security Editor. He also manages The Weichert Brief on Substack. Weichert also hosts “National Security Talk” on Rumble. He is the author of four bestselling national security books, the most recent of which is A Disaster of Our Own Making: How the West Lost Ukraine (Encounter Books). Follow him via Twitter/X @WeTheBrandon.
