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While global food inflation remained relatively stable in March, based on the monthly movement of the Food and Agriculture Organization (FAO) Food Price Index, pressures are expected to build in April and intensify further in May.
The FAO warned that farmers are approaching critical decision points: whether to adjust planting strategies in response to fertiliser availability, and whether to divert land toward biofuel production to capitalise on higher oil prices — potentially at the expense of global food supply. These risks are tied to ongoing disruptions linked to the protracted Strait of Hormuz crisis due to the effects of the war in West Asia.
“The clock is ticking,” and crop calendars put poorer countries most at risk of scarce and pricey fertiliser and energy inputs, FAO Chief Economist Maximo Torero said on April 13.
This comes amid compounding climate stress, including developing El Niño conditions, disrupted monsoon cycles, and forecasts of a hotter-than-usual summer, all of which could further constrain agricultural output.
But unlike natural disasters or El Niño, the Strait of Hormuz blockade “is something governments can resolve and have to resolve,” Torero said, warning that food inflation could spike to “dangerous” levels, seen in the aftermath of the COVID-19 pandemic if shipments of critical agricultural inputs do not resume promptly.
“The last thing we want is lower crop yields and higher commodity prices and food inflation for the next year,” Torero said, noting that would likely force countries to put policies in place to lower domestic food prices, triggering higher interest rates and as a result potential slower economic growth around the world.
According to the FAO, its Food Price Index — tracking monthly changes in international prices of a basket of globally traded food commodities — rose 2.4 per cent in March compared to February and stood one per cent higher year-on-year. This marked the second consecutive monthly increase, largely driven by elevated energy costs associated with geopolitical tensions in West Asia.
Exports of between 20 and 45 per cent of key agrifood inputs rely on sea passage through the Strait of Hormuz and if farmers produce with fewer inputs, there will be lower yields not only later this year and in 2027, but retail food inflation was likely to persist for the next few years.
FAO urged all countries to closely ponder biofuel mandates and above all to avoid export restrictions on energy and fertilisers.
If the standoff in the Strait of Hormuz is not quickly ended, anticipatory actions should be considered, in particular asking multilateral institutions to provide financing to countries at risk of losing access to basic fertiliser inputs given their planting has started, it said.