Prices at the Osh bazaar in Bishkek, in the Kyrgyz Republic, are rising due to inflation.<\/p>\n\n\n\n
The closure of the Strait of Hormuz is not a temporary disruption to maritime transport, but the beginning of a systemic agri-food shock that could trigger a severe global food price crisis within six to twelve months, a United Nations agency warned on Wednesday.According to the United Nations Food and Agriculture Organization (FAO), emergency measures are essential to avoid such an outcome. This involves setting up alternative trade routes, limiting export restrictions, protecting humanitarian flows, and creating reserves to absorb rising transportation costs.<\/p>\n\n\n\n
The time has come to “seriously start thinking about how to increase countries’ absorption capacity, how to strengthen their resilience to this bottleneck, in order to begin minimizing potential impacts,” said Maximo Torero, FAO Chief Economist, in a statement.This involves studying ‘the interventions of governments, international financial organizations, the private sector, as well as United Nations agencies and other research centers, in order to help countries better cope with the current situation’.From energy shock to food inflation
According to the FAO, the window of opportunity for preventive action is closing rapidly. The decisions made now by farmers and governments regarding the use of fertilizers, imports, financing, and crop selection will determine whether a serious global food price crisis will erupt within six to twelve months.The repercussions are already noticeable. The FAO Food Price Index, which tracks the monthly changes in international prices of a basket of food products traded globally, increased for the third consecutive month in April, due to high energy costs and disruptions related to the conflict in the Middle East.<\/p>\n\n\n\n
The shock spreads in successive stages: first energy, then fertilizers and seeds, before affecting agricultural yields. This is followed by a rise in commodity prices, and then an acceleration of food inflation.To mitigate these effects, the FAO recommends using alternative land and sea routes, notably via the eastern Arabian Peninsula, western Saudi Arabia, and the Red Sea. “However, these routes have limited capacity, which makes it essential to avoid export restrictions imposed by major producers,” said David Laborde, Director of the FAO\u2019s Agricultural Development Economics Division.For alternative corridors bypassing Hormuz
More broadly, the UN agency has compiled a series of policy recommendations aimed at addressing the Strait of Hormuz crisis. In the immediate term, the FAO recommends the establishment of alternative logistical corridors to bypass the Strait of Hormuz, the absence of export restrictions\u2014especially for energy, fertilizers, and inputs\u2014as well as the exemption of food aid.<\/p>\n\n\n\n
It also recommends promoting intercropping and better targeting support through digital registries, rather than generalized subsidies, in order to better reach vulnerable rural households and smallholders, particularly in Africa.In the longer term, the FAO calls for diversifying ports, corridors, storage and logistics systems on a global scale in order to reduce the risks of bottlenecks in the future. It is also about strengthening transport networks and developing, with fertilizer industry players, common tools for mapping soils and inputs.<\/p>\n\n\n\n
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