Could the war on Iran pose lasting risks to global food security? — Inside Story

[0:00] the iran war has created risks to food security from higher energy costs and shipping restrictions [0:06] the world's fertilizer production has been badly hit due to attacks on gulf chemical plants [0:12] where is food supply most at risk and could there be lasting impact this is inside story [0:19] hello welcome to the program i'm adrian finnegan so no early resolution to the iran crisis after [0:40] talks in pakistan ended without an agreement the war launched by the us and israel against iran has [0:46] brought profound global economic shocks as you will know wherever you're watching disruptions to [0:52] oil and gas supplies have hit the price of almost everything but the wars also slashed fertilizer [0:58] production due to attacks on plants in the gulf which are a major source of supplies worldwide [1:04] all this means that risks to food security are now in sharp focus warnings from the united nations say [1:10] that some are already vulnerable analysts also say the wider economic impact of the war [1:16] may last long after the conflict ends so how and why is food supply affected and who's most at risk [1:24] we'll speak to our guests shortly but first this report from imran ala khan delegations from the us [1:31] and iran traveled to islamabad to try to negotiate an end to a war that has regional and global [1:37] implications the talks didn't yield a solution but tehran says channels are still open [1:43] we reached understandings on a number of issues that's a reality however regarding two or three [1:51] important issues the views were distant and ultimately did not lead to an agreement despite [1:58] the us and iran agreeing on a two-week ceasefire on tuesday the implications of the war are still [2:04] being felt globally especially when it comes to food security one key factor to this the strait of [2:10] harmus iran has effectively closed the strait and that doesn't only impact the shipment of oil [2:17] it's also disrupting food supplies about 30 percent of the world's fertilizers usually pass through the [2:23] strait since the war began fertilizer shipments along this route have largely stopped cutting supplies to [2:30] farmers worldwide prices for yuria one of the world's most widely used fertilizers have already jumped by [2:37] about 40 percent nearly half of the world's urea is exported from gulf countries via the strait [2:44] high prices and shortages mean farmers use less fertilizer and analysts say that could cause crop [2:49] yields to fall by up to 30 percent in some regions researchers at the kale institute say a full closure [2:56] of the strait could push global wheat prices up by about four percent fruit and vegetable prices could [3:02] also increase by more than five percent some countries are at higher risks than others if the conflict [3:08] persists food prices could rise by about 31 percent in zambia 15 percent in sri lanka 12 percent in [3:15] taiwan and 11 percent in pakistan following attacks on its lng facilities last month qatar stopped output [3:23] at the world's largest urea plant after shutting down gas output this action has had a domino effect [3:30] india has cut output from three of its urea plants and bangladesh shutting down four of its five fertilizer [3:36] plants india is one of the world's largest producer of crops like rice and wheat in 2024 alone india rice [3:43] accounted for around a quarter of global exports china has also been hit as a major producer of tea [3:50] as well as garlic and mushrooms while some countries have stored more fertilizer after the ukraine war [3:56] threatened supplies the timing of the current disruption comes at a critical time for many farmers in the [4:02] northern hemisphere spring planting generally runs from mid-february to early may but continued [4:08] disruption to fertilizer supplies would likely create lower yield for staple crops and that would lead to [4:14] higher prices with the united nations warning that means more risk to food security especially for [4:20] poorer or more vulnerable countries i'm ronald al-jazeera for inside story let's bring in our guests [4:30] joining us from beirut is murad wahba who is acting executive secretary of the united nations economic [4:37] and social commission for western asia from new delhi we're joined by avanash kishore a senior research [4:44] fellow at the international food policy research institute and from bangkok steve keen an economist [4:50] and honorary professor at the university college london steve let's start with you you've warned that [4:56] the world could face famine within months not just parts of the world the world that's an [5:02] extraordinarily stark prediction what leads you to believe that that threat is immediate i suppose [5:11] the volume of the reduction in fertilizer throughput through the straight as you says the item said 30 [5:16] of the world's fertilizer passes through the straight which has now been disrupted for over a month [5:22] there's no sign of this wall stopping at any time so the disruption continues and that means that unless [5:28] countries have got foods uh fertilizer stocks worth two or three or six months or a year's worth of [5:34] the yield then they're going to be hit at some point uh when the the stocks run out the buffer stocks run [5:40] out and they're stuck with the flow coming from the straight and we we've also seen the damage to those [5:46] plants as you said uh there is not not going to be enough fertilizer available and the point that people [5:52] don't understand is that without fertilizer the carrying capacity of the pop of the planet is [5:59] about two billion people so six billion of us are alive because fertilizer flows freely now it's not [6:05] flowing freely and that could have all sorts of catastrophic effects in a range of countries a lot of [6:10] which they couldn't even imagine the thought that they might face a famine they could uh with this [6:16] disruption uh meaning that when the crops are planted there's not the sufficient yield and you won't have [6:22] enough food for your people so that could apply to places like england right that's what i was [6:27] hoping you would say at that point there we're talking about rich nations here being affected as [6:32] well as poorer nations yeah the usual bias we have is it's always going to be a problem for brown people [6:39] now let's be frank we've got masses of racism in the way we think about the world and the west [6:44] doesn't worry when brown people die well what doesn't happen white people start dying i think they [6:48] might pay a bit more attention and in many ways because it's got such a market oriented non-government [6:55] approach to virtually everything the uk has insufficient stocks of fertilizer and insufficient stocks [7:02] of diesel fuel and it imports about 40 percent or more of its food so it's very vulnerable to being [7:08] told you know we just can't supply you and it doesn't really have any bargaining ploy in the opposite [7:13] direction which australia has for example because where australia buys its fertilizer and its diesel [7:20] from uh it's it's a essential exporter of liquid natural gas to those countries so it's got a bit of [7:26] bargaining power but i don't think the uk has any avanesh let's talk about india in particular for a [7:32] moment um help us understand india's uh dependence here just how much of its fertilizer supply is exposed [7:39] to gulf shipping routes and the strait of hormuz quite a lot actually uh india has increased its [7:46] domestic production capacity but we import both uh fertilizers uh from gulf countries and morocco and [7:54] gas for producing uh urea uh within india so india's production is also being affected uh the good thing [8:03] or the one positive sign is india had a larger stock uh before the war started compared to normal years [8:10] and indian government is prioritizing fertilizer availability so it's restricting gas supply to [8:15] other sectors and trying to prioritize uh fertilizer production especially urea production when it comes [8:21] to phosphates which are also essential for food production there we are dependent on other countries [8:28] for imports we are trying to secure from alternate sources but it's not easy in this situation we haven't [8:34] had great success in securing uh more phosphate from other countries than our usual suppliers all [8:40] right so we are also if if fertilizer availability continues to tighten like this how quickly would [8:48] indian farmers begin to feel that when would it start affecting actual crop yields later so india's rice [8:59] growing season uh starts in about a couple of months uh we have fertilizers for the first application [9:06] but later in the season if the war doesn't resolve if the strait doesn't open then farmers will feel uh [9:12] the pinch especially if gas supplies are not uh secured from one place or the other so urea which is the [9:19] most critical one we need about 18 million tons in this season we can at best get up to 15 if new [9:26] supplies are not secured so there will be some shortage if uh the situation doesn't resolve itself [9:32] in the next few weeks or months yeah well i i saw you nodding vigorously as steve was talking there which [9:40] countries in in the arab world are of particular concern for you at this moment where are populations [9:48] most exposed if prices continue to rise as they are i think most arab countries as i see them are net [9:57] importers of food um you have very high net importers of cereal for instance in morocco in tunisia [10:07] in the sudan we have food to use stocks about till the end of the month so it is quite a serious [10:15] situation for the uh cereal importers but the crisis doesn't affect everyone in the same degree [10:22] um i think steve started uh saying that earlier in the program but there is a time when a restriction [10:31] on food affects the poor much more uh than it affects the rich and does in fact lead to an increase [10:39] in poverty and within that increase in poverty then we can talk about differential impacts on men women [10:45] on adults children and the elderly your organization uh says that a 20 percent rise in food prices could [10:53] push another five million people into food insecurity across uh the the arab world in particular how close [11:01] are we already to that scenario very close we're very close to that and i'm particularly worried because [11:11] the rising in food insecurity comes on top of existing vulnerabilities so when we say about 4.7 million [11:20] to be specific is our estimates uh increased uh food and sec number of people in food insecurity [11:27] that's on top of 198 million already in food uh insecurity steve um are policy makers and markets in [11:38] in in your view uh fundamentally underestimating just how vulnerable uh modern food systems are to shocks [11:48] like this absolutely and of course the trump administration clearly had no idea what it was [11:54] blundering into when it started this war in the first place but what we have a mindset which is [12:01] communicated by mainstream neoclassical economics that basically talks about markets being an equilibrium [12:07] perfect competition uh it implies there's numerous different sources if one if one supplier gets [12:13] knocked out then others can take its place there's no sense of urgency for the physical inputs to [12:19] production in economics textbooks that actually is necessary in the real world so economists who should [12:25] be the ones who are informing us about this are completely naive about the production systems and they're [12:30] not even aware most of them of the critical role of places like the strait of homos and inputs like [12:36] not just um fertilizer but sulfuric acid uh helium as well that also comes through the strait and these [12:43] are all making major disruptions to our production system far beyond what anybody would expect because [12:49] we've blinded ourselves into a naive view that there's no such thing as a critical input where there is [12:55] such a thing as a critical input and four of them pass through the strait of homos is it too late to fix it [13:03] oh yes there's this you you can't make up for missing ships i mean we know we've gone from something you [13:09] know and hundreds of ships to the to the tens of ships you know from triple digits to single digits [13:15] and the number of ships passing through um that's applying to all sorts of products of course but once [13:21] that uh you know that gap in supply is there then when the existing stocks are used up for the inputs [13:28] at the fertilizer factories where they're headed then there's just nothing can be done for some time [13:34] you won't be able to produce anything until the ships on the other side of this breakdown start [13:40] appearing and of course we are not on the other side of the breakdown we look like we're going back [13:44] into it again in the pump and dump scheme that trump has invented here uh so i if the longer it goes [13:51] on the more likely i'd have famines for which there is no potential for recovery [13:55] avidash india's government is at the moment uh rising uh absorbing rather rising uh energy and [14:03] fertilizer costs how sustainable is that though if this conflict does indeed drag on for months [14:11] rather than weeks i i think indian government will continue to do that we know this from the ukraine [14:17] war early ukraine war fertilizer prices skyrocketed and indian government completely absorbed the shot [14:23] the uh the fiscal deficit will increase it may have other macroeconomic impacts but i don't see [14:30] indian government raising prices at least of fertilizers this season fuel i'm not sure about [14:36] i do not have a clue most probably indian government will continue to absorb the shock [14:41] because rising food prices would be very difficult uh in a country like india where [14:48] households still spend half of their budget on food so even a small increases in food prices can [14:53] cause a lot of ill fare if i may use that term so government of india will try its best i also want [15:00] to add that i am less pessimistic about world food prices than the other two participants in this [15:07] discussion if the war uh resolves and the street opens um it at as of now in large parts of south [15:14] asia and many other parts of the world it's a price squeeze uh input prices unlike in india are going up [15:21] food prices are not expected to go up uh very sharply because there isn't a big demand jump that is [15:28] happening the supply is more comfortable than it was in 2005-6 crisis or 11-12 crisis or even during [15:34] the ukraine war so if it were to resolve mid-season let's say i think we would come back from the brink if [15:42] it doesn't then then uh then the life would be more difficult uh morad do you share steve's pessimism [15:50] here and and for countries uh already under considerable strains such as lemon uh lebanon and uh and yemen [15:56] uh does this risk becoming not not just a food issue but an even wider uh social and political [16:06] stability issue it is indeed and as i said i mean the crisis in uh fertilizer the crisis in food [16:16] availability occurs not only because of the closure of the straits but also on top of existing [16:23] vulnerabilities in the conflict for instance in gaza to take an extreme case where 90 percent of the [16:31] population is displaced which is highly dependent on uh food coming in as aid the price of flour in the [16:41] past month has increased by 270 percent now this isn't about only the straits this is about a [16:49] vulnerability compounded by conflicts uh and indeed by unequal distributions in many countries in the region [16:57] so it is is the problem here that that this this conflict is exposing multiple weaknesses uh uh at [17:05] once i mean food uh water energy all at the same time it's a perfect storm you have it all and conflict [17:16] and war steve i mean i think one shouldn't neglect the impact of the war on uh food availability uh to [17:23] populations and the differential impact you have say on rural population versus urban [17:30] uh populations but also the fact that when you have a crisis when you have a crisis in a rural sector [17:38] in the agricultural sector women tend to suffer far more than men for instance steve you heard avinash [17:46] saying that he wasn't quite as pessimistic as you um i mean some would say that that the predictions [17:53] that that you made right at the beginning of the discussion here of famine in countries like like [17:57] britain uh are perhaps overly alarmist what would you say to those who might argue that you are [18:05] overstating the danger right now i'm not overstating the potential okay it might not happen we might be [18:14] lucky uh symptoms might arrive just in time there may be enough fertilizer stocks to avoid a total [18:20] calamity all these things are a possibility but at the same time the other possibility is still there [18:26] now what happens if you don't talk about it you end up letting idiots like donald trump blunder into [18:30] the middle east thinking it's all about controlling the flow of oil without realizing he's disrupting [18:36] the entire industrial price production system of the whole planet so in ignorance i would rather have [18:43] people be too alarmed than too ignorant all right uh avinash what do you make of that i don't know i'm [18:55] not sure about the theory of change here is that if alarmism leads to better action and uh thing i [19:02] am not sure i don't have enough experience all right all right i think as scientists we should make [19:06] predictions be let me let me put this to you let me put this to you then if india were forced to [19:13] protect its own domestic supply uh by restricting grain exports what do you think the knock-on effect would [19:23] be for countries that rely on on indian exports india has done that in the past till recently our rice [19:32] and wheat exports were banned rice we are a big game 40 percent of globally traded rice comes from india [19:38] and it would lead to higher prices in countries that rely on it so bangladesh sri lanka nepal [19:44] in india some parts of africa uh northern and eastern africa also the rice consumption is going on [19:50] uh growing uh and east asia so prices would increase as uh our delegate from uh unis said [19:58] uh when prices increase it's the poorest in those countries who would suffer more so there would be [20:03] uh a pinch in the pocket of consumers uh absolutely but i won't go uh to the extent of predicting families [20:10] just all right you heard murad talking about the perfect storm what about there in india if for [20:17] example uh india were to face poor rains as as well as prolonged disruption to its supply of fertilizers [20:27] how serious could that combination become for india in particular so not in 2026 i think we would [20:36] still be okay because india has about 60 million tons of rice and wheat stored more is coming in uh i guess [20:43] that india's response would be to restrict exports of rice and wheat too that will have an effect on [20:50] rice prices globally uh and that would affect everyone within india my my sense is that there [20:57] may be increase in rice prices and wheat prices early next year that would affect indian poor uh badly [21:04] and if fertilizer supplies don't even uh not restored even next year then i don't even know what to [21:10] predict and uh what to think about then things can get quite serious morad what what should governments [21:15] uh in the the arab region uh be doing right now urgently to avoid this becoming uh a full-blown [21:24] humanitarian emergency oh i think we have a full-blown humanitarian emergency in many countries already but [21:33] uh what uh what i think uh ought to be done and what we're recommending is an increase in uh monetary [21:41] subsidies to uh the poorest to avoid the impact falling disproportionately on them and to avoid the [21:49] social impacts of severe food insecurity i think on on women and on children steve also to look at i [22:01] think the impact of the conflict on water stress because we are talking in say in middle east and arab [22:08] countries uh of water stressed countries in the gulf certainly um to a certain extent in saudi arabia [22:18] but also in other countries in egypt in jordan and in the sudan steve help us understand i'm going to [22:28] circle back here a little bit but help us understand why fertilizer in particular matters so much to to [22:35] this conversation that we're having here many people watching or listening may not immediately connect [22:42] disruption in gulf petrochemicals or the close of the strait of hormuz the closure of that to uh the [22:50] price of the of of the food on their supermarket shelves well you know we we think we eat green stuff [22:58] ever since we've invented fertilizer we've been eating brown stuff the green wrapping on the outside [23:03] is basically us turning fossil fuels into food that's what the fertilizer does so you have to [23:09] previously rely upon nutrients you'd find in the soil uh or you know replenishing from animals and so [23:14] on and that the approach to putting fertilizer in as i said in the beginning uh would have support about [23:21] two billion people at most now instead we use products from petro petroleum byproducts uh the [23:28] nitrogenous fertilizers and super phosphates both involve using petrochemicals as part of the input [23:34] process uh so that's why the plants are located where the petrochemicals uh are drilled now this is [23:43] just how fragile we are we we think we have enormous resilience but in fact we have enormous fragility [23:50] and this was going to be exposed by global warming but donald trump is a bit like a a four six [23:55] cyclone coming in before the the natural ones start turning up and showing us how delicate our [24:01] production systems are they are not robust they are very dependent upon specific inputs from specific [24:08] locations which cannot be easily replaced once they're damaged and of course at the moment the [24:13] supply is shut down completely uh by the blockage of the strait of hormones i mean i know you're not [24:19] quite as pessimistic as steve but has this conflict at least exposed just how dependent the world remains [24:26] on a very small number of producers uh and and shipping routes for for absolutely critical [24:33] agricultural inputs that's true uh we cannot deny it uh but that one thing i'll add to steve's point is [24:42] one is uh the production feasibility uh facility uh related to it is the facility of the trade we are [24:49] interdependent on many things if trade restrictions were not to happen logistically or by policy then [24:56] trade can help reduce uh facility in production in one location or the other uh the worst outcome would [25:03] be if production itself suffers and then trade also suffers right if we stop trading if you put export [25:09] uh bands one of the regions we are in a more um fragile situation is china which is the largest producer [25:17] of fertilizers has stopped exporting or restricted exporting uh both urea and phosphatic fertilizers [25:25] that has made the situation worse so trade restrictions export restrictions by some countries or many [25:30] countries makes the situation worse here uh if trade keeps flowing if if it were to keep flowing uh we'll [25:37] have less vulnerability as we saw right after ukraine crisis and other crisis very quickly countries like [25:44] lebanon and yemen were already under severe uh economic pressure before this conflict began as we said [25:50] just how dangerous is it to add food inflation uh and supply disruption into that mix extremely [25:59] dangerous i think it's affecting as i've been saying um the poorer uh members of the population and this is [26:09] the majority and so with an increase in poverty with a reduction in in subsidies and therefore [26:18] increasing hardship for people who already spend half of their income on food i think it's an explosive [26:24] situation and steve uh final word to you if the strait of hormuz were to somehow uh reopen tomorrow [26:33] uh it it it it's highly unlikely that that's going to happen and calm uh somehow holds does this crisis [26:40] ease quickly or has lasting damage already been done to to global supply resilience well lasting damage [26:50] i mean one of the at least one of the urea plants has been damaged uh and is no longer producing areas [26:55] as your segment said so we have to replace that facility and these things take time again because people [27:02] get lulled into a false sense of security by drawing supply and demand curves and imagining that tells [27:08] you everything you can't move up a supply curve uh without taking time and this is what's left out [27:13] of conventional thinking and therefore people aren't conscious of it once the supply is gone it might [27:18] take years to get it back to the previous level now in the meantime it means that you become more [27:23] food fragile uh if there was a 30 reduction for example in uh in food in fertilizers well i apply [27:30] there could be a 30 reduction in global food output now we do waste 30 of the food we uh we produce at [27:39] the moment but that would mean we'd have to go from being lackadaisical about that to absolutely [27:43] scrupulous about not wasting that food to give ourselves a buffer to get through the the time ahead [27:49] but this is showing the danger of the just-in-time efficiency versus robustness approaches uh that [27:56] economists have pushed on governments for the last 30 or 40 years uh always assuming the flows that [28:02] kept it going would keep on happening now we're seeing those flows being disrupted and we're seeing [28:07] the consequences gentlemen there we will have to leave it many thanks indeed morat wakbar [28:13] avinash kishore and steve keen thanks for watching you can see the program again at any time by going to the [28:20] the website that's at aljazeera.com for further discussion join us at our facebook page at facebook.com [28:25] forward slash aj inside story and of course you can join the conversation on x our handle there is at [28:32] aj inside story i'm adrian finnegan aljazeera's extensive coverage from across the middle east and [28:37] around the world continues next