Now, the threat of war in Iran is poised to undermine these gains, leaving families to struggle to meet their food needs. As Odile Renault-Basso, president of the European Bank for Reconstruction and Development, where the bank is a leading lender in about 40 emerging economies, stated: «This could have a big impact on prices and food prices over time». Meanwhile, Moody's Managing Director Marie Diron noted that food and fuel account for less than a quarter of the consumer price basket in most advanced economies, but represent 30% to 50% in many emerging markets. She said: «Facing a number of economies with this risk makes them particularly vulnerable to the risk of price swings driven by external factors». Fertilizers are a key pressure point, as about 30% of globally traded fertilizers pass through the Strait of Hormuz, and producers in the Gulf region are major suppliers of ammonia and urea, according to the UN's Food and Agriculture Organization (FAO). Bank of America warns that the conflict threatens 65% to 70% of global urea supplies, noting that prices have risen by 30% to 40%. In turn, FAO's Chief Economist Maximo Torrero, commenting on the implications if the conflict lasts only a few more weeks, said: «This will affect agriculture, there will be a decrease in the supply of primary commodities in the world, such as basic grains and feed, and consequently, dairy and meat products». Unlike fuel, there are no global strategic reserves for fertilizers, but some countries are more at risk than others. Latin America, which is far from the war and includes the energy and agricultural giants Brazil and Argentina, is in a safer position. However, Brazil's Agriculture Minister Carlos Favaro warned that the country could face problems with fertilizer supplies. In oil-producing Nigeria, the Dangote fertilizer plant will help mitigate the crisis. Conversely, countries like Somalia, Bangladesh, Kenya, and Pakistan typically do not hold large fertilizer stocks and rely more on supply chains. Unlike in 2022, when the Russia-Ukraine war abruptly affected the grain exports of the two countries, rising fertilizer prices or even a severe shortage could lead to lower crop yields, while high energy prices increase production and transportation costs. Data from the International Fertilizer Association shows that any fertilizer supply shortage is likely to first affect crops that are heavily dependent on nitrogen, such as corn and wheat, and increased feed costs will be reflected in all products, from bread to poultry and eggs. Disruption to fertilizer shipments and rising energy prices due to the Iran war threaten a new wave of food price increases in vulnerable countries, which could lead to a setback lasting years, as many countries are still recovering from consecutive global shocks. Developing countries saw a marked improvement and attracted investment after the COVID-19 pandemic and the war in Ukraine disrupted food, fuel, and financial markets.
