AFBF Calls for Intervention to Prevent Food Supply Shocks

U.S. farmers are bracing for a system shock resulting from the disruptions to shipping through the Strait of Hormuz and the impact on fertilizer availability and prices. American Farm Bureau Federation President Zippy Duvall today urged President Trump to intervene in a letter that lays out several recommendations.

The letter states, “Like oil, global fertilizer markets are highly vulnerable to disruptions in maritime transit routes, especially through the Strait of Hormuz, a critical shipping corridor for key fertilizer materials and finished fertilizer. Further, the recent energy production halts in the Middle East will affect the price and availability of many downstream products farmers depend upon. These supply chain shocks are expected to drive already record-high input prices even higher at a time when farm margins are already extremely tight and many farmers are underwater.”

An analysis by American Farm Bureau economists reveals the seriousness of the situation, as explained in a Market Intel also released today. It points out that large volumes of urea, ammonia, phosphates, sulfur and petroleum produced in Gulf countries move through the Strait of Hormuz. Additionally, “Countries exposed to disruption in the region account for nearly 49% of global urea exports and about 30% of global ammonia exports, reflecting the concentration of fertilizer production and export capacity in and near the Persian Gulf.”

The letter to the president goes on to explain in stark terms the potential consequences of inaction, stating, “Without strategically prioritizing the delivery of critical farm inputs such as urea, ammonia, nitrogen, phosphate, and sulfur-based products, the U.S. risks a shortfall in crops. Not only is this a threat to our food security – and by extension our national security – such a production shock could contribute to inflationary pressures across the U.S. economy.”

The letter lists seven recommendations to lessen the impact of the expected fertilizer shortage. They range from utilizing the U.S. Navy to provide safe transit for fertilizer shipments through the Strait of Hormuz to leveraging federal tools such as those available through the U.S. International Development Finance Corporation to address insurance or financing barriers for vessels transporting fertilizer cargo.

Read the letter to President Trump here.

Read the Market Intel here.