A global food price crisis is looming. Who will be hit?

The Middle East conflict has disrupted trade across the Strait of Hormuz and its impact could extend far beyond energy markets, risking a rise in global food prices.

The strait is not only a key artery for oil and gas shipments, but also for fertilizers critical to global agriculture. Analysts told CNBC that the disruptions could translate into higher agricultural costs, lower crop yields and, ultimately, more expensive food.

“Higher energy and input costs risk reigniting global food inflation just as retail food prices had returned to more historic levels in many countries,” according to the International Food Policy Research Institute (IFPRI).

Raj Patel, a research professor at the University of Texas, also warned that conflict-related fertilizer disruptions could amplify global food pressures through several channels simultaneously.

“The short answer is: significant and faster than people think,” Patel said. “The Strait of Hormuz is a fertilizer bottleneck. Qatar, Saudi Arabia, Oman and Iran together supply a substantial portion of the world’s traded urea and phosphates, and virtually all of it transits through Hormuz.”

Countries that rely directly on food imports, as well as those that rely on fertilizers, could face rising costs within weeks, particularly during key planting periods, industry observers said.

Gulf countries face: immediate risk

The first region likely to feel the impact includes the countries closest to the conflict.

“Regionally, GCC consumers are more exposed to short-term increases in food prices due to their heavy reliance on sea imports transiting the Strait of Hormuz,” said BMI commodities analyst Bin Hui Ong.

Persian Gulf economies, such as Qatar, Bahrain, Kuwait and Saudi Arabia, rely heavily on food imports shipped through the Strait of Hormuz. If shipping remains limited, supplies would have to be diverted through alternative corridors or transported by land at a much higher cost, analysts said.

“When it comes to short-term shortages, all countries around the Persian Gulf west of Hormuz will have difficulty importing food,” Mera said. “These countries will need to find alternative routes.”

He noted that wealthier states such as Qatar, Bahrain, Saudi Arabia and Kuwait have the financial resources to import food by air or land if necessary, but poorer neighbors may have a harder time.

“Iraq may suffer. Iran itself will also face shortages,” Mera added.

Sub-Saharan Africa: the most vulnerable

Beyond the Gulf region, the greatest risks can be found in parts of sub-Saharan Africa, where farmers rely heavily on imported fertilizers and households spend a large portion of their income on food.

“Sub-Saharan Africa is the most vulnerable region,” Patel said. Data from the University of Texas at Austin shows that more than 90% of fertilizers consumed in sub-Saharan Africa are imported, mostly from outside the continent.
Nitrogen-intensive crops, such as corn, a key staple in the region, are especially sensitive to fertilizer shortages, raising the risk of lower harvests and higher food prices, other experts noted.

“The poorest and most densely populated regions will likely suffer the most,” said Rabobank’s Mera, including parts of sub-Saharan Africa.

South and Southeast Asia could also face increasing cost pressures.

Major agricultural economies, such as India, Bangladesh, Thailand and Indonesia, rely heavily on fertilizers imported from the Gulf. A sustained disruption could increase costs for farmers during key planting seasons.

“A farmer in Thailand who is 90% dependent on imports, who buys urea produced from gas, shipped through Hormuz and with a dollar price that is strengthening due to geopolitical risk, simultaneously faces a cost shock in all dimensions,” Patel said.

The region’s staple crops, including rice and corn, are among the crops that require the most fertilizer.

Mera singled out Indonesia and Bangladesh among the countries likely to be hardest hit in the region.

If farmers respond to rising fertilizer prices by reducing their use, crop yields could decline and drive up food prices.

Brazil, one of the world’s largest agricultural exporters, could face rising costs if fertilizer markets tighten, analysts said. Brazil imports about 85% of its fertilizers, making its soy and corn production highly dependent on global supply chains.

A prolonged disruption during Brazil’s key fertilizer import season could disrupt global agricultural markets and eventually affect food prices.

Even if agricultural production remains relatively stable in the short term, rising energy costs alone could drive global food inflation, experts said.

Energy plays an important role throughout the food supply chain, from powering farm machinery and producing fertilizers to transporting crops and processing them into food products.

“The biggest impact on consumer prices will not be the impact on agricultural products, but the fact that energy represents a large portion of the total retail food bill,” said Joseph Glauber, senior researcher at the International Food Policy Research Institute.

Chris Barrett, an agricultural economist at Cornell University, said the magnitude of any price shock will largely depend on how long shipping disruptions persist.