Man did not weave the web of life, he is merely a strand in it. Whatever he does to the web, he does to himself. – Seattle
Those aren’t mountains.
I don’t think there is a lot of discussion of the potential for mass food insecurity, political instability, and magnified impacts of a very large global El Niño event. Metaphors fail.
Pandora’s Cavern.
The standoff between President Donald Trump and Iran that has brought shipping to a virtual halt in the Persian Gulf has set off supply chain shocks that are upending lives thousands of miles away in Asia, raising costs for farmers at the start of key planting seasons that will sharply reduce crop yields in the second half of the year and beyond, according to government officials, economists and farming groups.
Addressing world leaders in Rome on Thursday, Dongyu Qu, the director general of the U.N. Food and Agriculture Organization, said the war had created not only a geopolitical crisis but “a disruption at the core of the global agrifood system.”
Iran’s destruction of gas infrastructure in the Gulf and the dueling U.S.-Iran efforts to choke the Strait of Hormuz have prevented crucial supplies of fuel and its derivatives like urea — a potent source of nitrogen that enhances harvests — from leaving the Middle East. Because fuel infrastructure takes years to build, there is no ready replacement for these supplies.
In effect, 30 percent of the world’s urea has been “wiped out,” said Pranshi Goyal, senior analyst at the market intelligence firm CRU Group. China, a major fertilizer producer, has restricted exports to ensure its farmers have enough. Russia, another big manufacturer, is seeing demand soar, potentially boosting its economy and aiding its war in Ukraine. On what is known as the spot market, urea prices are up 40 percent since February.
On Monday, Trump said the United States would guide stranded ships through the Strait of Hormuz but then quickly reversed himself after reports that two U.S. destroyers had come under attack while transiting the strait. Even if ship traffic resumes, however, it would take at least a month or two for cargo to arrive at destinations and for markets to stabilize, Goyal said.
The longer the production plants in the Middle East stay closed, the longer they will take to restart. “This problem builds in a nonlinear fashion,” Goyal said.
In Thailand, the Philippines, Bangladesh and Australia, which are the first since the war to enter key sowing periods, farmers are choosing to skip or reduce planting, or cut fertilizer use, which will lower yield.
As the war stretches deeper into the crop calendar, farmers from more countries will be forced to make similar choices, said Maximo Torero, chief economist for the FAO. “Right now, the impacts are more severe in Asia,” Torero said. “But clearly, this is moving east to west and south to north.”
In June, India and Brazil, two of the world’s biggest agricultural producers, will ramp up orders for urea. If, by then, vessels carrying urea are not sailing, there will be “significant yield loss” across many countries, Torero said. Commodity prices will climb, stoking inflation. The hit to economic growth, he said, will be “very close to what happened in covid-19.”Ask The Post AIDive deeper
To make matters worse, scientists say the planet is likely to be hit with asuper El Niño climate pattern this year, which could result in extreme heat and drought that will deal another blow to harvests.
Electric vehicles (EVs) are widely considered to be one of the big winners from the current conflict between the United States and Iran, as they allow users to move away from reliance on fossil fuels.
But EVs are exposed to the Strait of Hormuz as the manufacture of their batteries is dependent on sulphuric acid, a key component in the extraction of metals such as nickel and lithium.
Sulphuric acid is vital in the high-pressure acid leach method of extracting battery-grade nickel from ore at mines in Indonesia, the top producer of the metal.
It is also used to extract lithium from hard rocks in Australia, the biggest producer of the metal, and is also important to produce copper.
Prior to the February 28 U.S. and Israeli attack on Iran about half of global seaborne sulphur went through the Strait of Hormuz, largely to countries in Asia.
Sulphur is a by-product of producing crude oil and gas, and refining into fuels, making Middle East countries such as the United Arab Emirates and Saudi Arabia major suppliers of the raw material that is used to make sulphuric acid.
Sulphur is usually transported by bulk carriers and volumes through the Strait of Hormuz have collapsed since the start of the Iran conflict, with data from commodity analysts Kpler showing only 30,000 metric tons made it out in April and 180,000 tons in March.
This was down from an average of 1.27 million tons a month in the three months prior to the start of the conflict, according to Kpler.
The loss of Middle East cargoes has sent the price of sulphur soaring, with delivered prices to Asia reaching as high as $880 a ton, up 50% since the start of the war.
The higher price for sulphur is feeding through to sulphuric acid and will raise costs for nickel, copper and lithium miners, but of more concern is that supply might be constrained.
If miners in Indonesia, Australia and Chile are forced to compete with each for supplies, it raises the risk that some may be forced to curtail production if they are unable to obtain enough sulphuric acid.
Iran’s control over the Strait of Hormuz has made freedom of navigation for vessels, a norm long upheld by the United States and the rest of the world, suddenly seem less certain. In a recent turn of events that sent shockwaves through Southeast Asia’s diplomatic community, Indonesian Finance Minister Purbaya Yudhi Sadewa floated in April the idea of placing tolls on ships transiting the Strait of Malacca. “If we split it three ways between Indonesia, Malaysia, and Singapore, that could be quite something, right?” he said at a symposium.
Although the finance minister has since walked back his comments after Indonesian Foreign Minister Sugiono publicly rejected the idea, the simple fact that it was mentioned suggested that Indonesia’s political leadership has begun considering the idea. Other Indonesian political elites have privately suggested to me that, at high levels of the government, the idea of using the Strait of Malacca to raise money for Indonesia’s budget has been taken seriously.
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But there’s plenty of CO2 in the air to make plants grow!
I hope precision fermentation is getting a major investment.