Key facts
- The closure of the Strait of Hormuz has severely disrupted diesel shipments.
- Farmers globally are facing fuel shortages for irrigation and farm machinery.
- This disruption threatens agricultural production and could lead to a global food crisis.
- Existing food stocks are currently stabilizing prices, but future supplies are at risk.
- Rising fertilizer costs are also impacting farmers.
The closure of the Strait of Hormuz, a critical global shipping route, has led to severe disruptions in diesel shipments, putting farmers worldwide at risk of food shortages. Renewed tensions and a U.S. blockade on ships using Iranian ports have kept vessels idle, straining supply chains.
According to Máximo Torero, Chief Economist of the Food and Agriculture Organization (FAO), between 20% to 30% of fertilizers and significant amounts of crude oil and natural gas are not moving through the strait. While global food markets remain stable for now due to existing stocks, experts warn that this buffer is temporary. As planting decisions are made, farmers facing higher costs and limited access to fertilizers may reduce input use, leading to lower yields and potentially driving up food prices later in the year.
Farmers rely on fuel deliveries to run large machinery, and many are now receiving only a fraction of their ordered diesel or facing significant delays. Some Australian fuel wholesalers have begun rationing fuel. Prices have skyrocketed, with some farmers paying upwards of $2.30 per liter for premium diesel, a 50-cent increase in a single week. In addition to fuel, farmers are also contending with rising fertilizer costs, as many suppliers are located in the Middle East.
Experts warn that if immediate relief is not provided, grocery prices will rise in the coming months as farmers absorb the increased costs. The disruption impacts the entire food value chain, from farm machinery to transport and the availability of essential fertilizers.