Gerald Celente just warned that the Iran War foreshadows a food price shock that may be significant enough to cause social unrest.
War Foreshadows Food Price Shock
March 25 (King World News) – Gerald Celente: Developing nations had begun to overcome the impacts of the COVID War, the Ukraine war, and years of inflation, so much so that they were attracting investment in recent months. Now, thanks to the Iran war, these countries are likely to face a new crisis: soaring food prices, Reuters reported.
“This could have a big impact on food prices over time,” Odile Renaud-Basso, president of the European Bank for Reconstruction and Development (EBRD), said in a public statement. The bank is a mainstay lender to about 40 developing nations.
In Western countries, consumers typically pay no more than 25 percent of their incomes for food and fuel. In developing nations, those two expenses often take a third to half of household incomes, managing director Marie Diron at Moody’s Ratings told Reuters.
“This exposure leaves many economies particularly vulnerable to externally driven price volatility,” she said.
A key danger to these nations is the war’s impact on fertilizer. Gulf states are major producers of ammonia and urea, both of which are petrochemical ingredients in fertilizer. Two-thirds to three-quarters of the world’s urea supply is threatened by the war and prices have jumped 30 to 40 percent, Bank of America analysts found.
Also, almost a third of the world’s fertilizer supply travels through the Strait of Hormuz, which Iran has effectively shut down…
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“This will affect planting. There will be a lower supply of commodities in the world, of staple cereals, of feed, and, therefore, of dairy and meat” even if the war ends within a few weeks, Maximo Torero, chief economist for the U.N. Food and Agriculture Organization (FAO), said to Reuters. “Very few countries are resilient to this.”
Bangladesh, Kenya, Pakistan, and Somalia do not stock fertilizers and are particularly dependent on continuing supplies from the Gulf. Kenya’s fertilizer’s price has already grown by 40 percent, according to the FAO.
Rwanda also is seeing fertilizer costs skyrocket. “There’s a lot we are trying to figure out to contain that stress,” finance minister Yusuf Murangwa told reporters on 16 March.
Corn and wheat, among the world’s most fertilizer-dependent staple crops, likely will show shortages first, jacking up global prices, data from the International Fertilizer Association indicates.
Because those crops are used in everything from animal feed to candy bars, their higher prices will be felt throughout the global food economy.
In developing nations, there already has been panic buying of cooking oils, corn, rice, and wheat, the FAO noted.
“That’s always the issue with these kinds of supply shocks, that you get the energy part first, and as that subsides, you can get the food portion coming through the second wave,” global economist David Rees at asset manager Schroders said to Reuters.
Before the U.S.-Israeli conflict with Iran erupted in February, global inflation had moderated, and some food prices were even falling. In January, global food inflation had dropped to the lowest levels since at least 2017, Rees said.
In the past, rising food prices have set off social unrest and political upheaval. In 2022, high food costs sent protesters into the streets in Chile, Tunisia, and other countries. Syria’s decade-long civil war was caused, in part, by the rising price of bread.
Also, Gulf states host millions of foreign workers. As those economies pucker, workers’ remittances home to their families – a vital source of income in those countries – are likely to dry up. Affected countries will include Jordan, Lebanon, and Pakistan, among others.
The EBRD is mulling various options to mitigate the impending food price shock, including subsidizing fertilizer purchases. Torero at the FAO has called on governments and other international aid agencies to prepare interventions.
“If [the Iran war] goes further than a month, we will have problems of planting and problems of yields,” he warned.
TREND FORECAST:
The war in Ukraine (which is totally out of the mainstream news) disrupted key food shipments from that country to Europe and Asia. As a result, other countries expanded their plantings of many of those staples to replace lost supplies.
To the extent possible, other countries now will try to expand their agricultural industries. The new war will add new vigor to the effort to re-shore and near-shore key commodities.
Also, oil producers in the U.S. and other non-Gulf countries may evaluate their own ability to produce helium, naphtha, sulfur, urea, and other products as supplies from Gulf nations may be hobbled for some time to come. And the war will escalate the clean energy trend.
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