Hormuz closure could trigger ‘agrifood shock’, price crisis within a year, FAO warns

The closure of the Strait of Hormuz is the beginning of a "systemic agrifood shock" that could trigger a severe global food price crisis within six to 12 months, the United Nations Food and Agriculture Organization said on Wednesday.

• The disruption is not a temporary shipping problem, the agency said, warning "the window for preventive action is closing quickly".

• Governments, international financial organisations and the private sector need to take decisions on alternative trade routes, restraint on export restrictions, protection of humanitarian flows and buffers to absorb higher transport costs, it added.

• The time has come to "start seriously thinking about how to increase the absorption capacity of countries, how to increase their resilience to this choke, so that we start to minimize the potential impacts," FAO Chief Economist Maximo Torero said in a new podcast published on Wednesday.

• The FAO Food Price Index - which tracks monthly changes in international prices of a basket of globally traded food commodities - rose for a third consecutive month in April, driven by high energy costs and disruptions linked to the Middle East conflict.

• In the short term, FAO recommended shifting trade to alternative land and sea routes, refraining from export restrictions - particularly on energy, fertilizers and agricultural inputs - and ensuring food aid flows are exempted from any trade curbs.

• Over the medium term, the agency called for emergency credit lines for farmers aligned to harvest periods, expanded use of digital farmer registries for rapid disbursement of aid, and reactivation of a food shock financing window established in 2022.

• FAO also warned the crisis could deepen with the onset of El Niño weather phenomenon, expected to bring droughts and disrupt rainfall patterns across several regions.