CounterPunch Exclusives

CounterPunch Exclusives

The Global Food Crisis

Image by Md. Hasanuzzaman Himel.

This article is a warning. A global food crisis is likely approaching — driven by the collapse of supply chains feeding the agri-food system, a consequence of the war against Iran and the resulting blockade of the Strait of Hormuz. The prospect has gone largely unnoticed by most political and economic actors.

Supply crises, as a rule, are resolved through the Law of Supply and Demand. When supply falls, prices rise; those who can afford to pay grumble but pay, while those who cannot find a cheaper substitute. Or do without.

But we are talking about food — and food is indispensable to life.

To those who believe that “the market self-regulates” and that this supply crisis will therefore be absorbed through higher prices — costlier food, but food nonetheless — I would say: there is a threshold. Below a certain level of supply, the problem is no longer that food becomes expensive; the problem is that there is not enough food for everyone, regardless of how much money people have to spend. This article explains the dynamic well. If the Law of Supply and Demand is the global economy’s homeostatic mechanism — its way of restoring equilibrium after a shock — then supply chains are its Achilles’ heel.

Supply chain disruptions and extreme weather events periodically afflict one country or another and are offset through global trade. But never before has there been a situation like the present one, in which farmers across every corner of the world are simultaneously grappling with shrinking supply and rising input costs — fertilizers, pesticides, diesel, lubricants, transport. And one thing is certain: anywhere in the world, a farmer pays closer attention to news about the Super El Niño than the average person does.

Agriculture has always been a business of thin margins and constant uncertainty, where disincentives weigh heavily. Whether to skip this planting season — or to plant less — is a decision each farmer makes individually. Agriculture is a fragmented activity, loosely coordinated at best. There is simply no way to know how many producers have chosen not to plant. But since February 28th, millions across the world have made that choice.

Food planted today will take several months to be harvested, processed, transported, distributed, and finally consumed. What we eat today was planted months ago — perhaps more than a year ago. This includes animal products, since livestock are fattened on plant-based feed. The implication is that the world is locking in a crisis that will not erupt tomorrow, but months from now — possibly next year.

Governments track harvests — food after it has been collected — but not plantings, and certainly not what was never planted at all. Only when the (smaller) harvests arrive will the true scale of the problem become apparent.

Has the world already crossed the threshold between expensive food and genuinely scarce food? There is no way to know. Every day that Hormuz remained closed made the situation worse.

Mass hunger means social upheaval. What is incubating in the aftermath of the war against Iran is advancing quietly toward what could become the greatest economic and social crisis in recorded history.

The Supply Chain Breakdown

Let me be clear from the outset: this is not only a global food crisis. It is a crisis running through virtually every global supply chain, because petroleum derivatives are embedded in virtually all of them:

Shortages of petrochemical naphtha will ripple through plastics, paints, and countless downstream industries — including automotive manufacturing. Shortages of jet fuel will hit tourism, and through it, hospitality and restaurants. Shortages of bunker fuel — the heavy oil that powers cargo ships — will disrupt maritime trade worldwide, with consequences that are difficult to fully anticipate. Shortages of lubricants and greases will impact all of industry, since every machine requires them. Shortages of sulfur — a byproduct of oil refining — will curtail sulfuric acid production, the single most widely used chemical in the world, present across countless production chains. Mining will be severely affected; losses in copper and nickel mining will reverberate through everything that depends on electricity, including batteries, which in turn will set back the global clean energy transition. Sulfuric acid also figures in urban water and sewage treatment, oil refining, and the manufacture of steel, textiles, pulp and paper, rubber, leather, chemicals, pharmaceuticals, and cosmetics. Shortages of helium gas — a byproduct of natural gas liquefaction — will threaten microchip production and therefore all electronics supply chains. Even medical MRI machines will be affected, since they require helium to operate (China has just halted its helium exports). Before the war, Persian Gulf countries also supplied a substantial share of world aluminum exports. Taken together, all of this will inevitably destabilize the global financial system.

Shortages of petrochemical naphtha will ripple through plastics, paints, and countless downstream industries — including automotive manufacturing.

Shortages of jet fuel will hit tourism, and through it, hospitality and restaurants.

Shortages of bunker fuel — the heavy oil that powers cargo ships — will disrupt maritime trade worldwide, with consequences that are difficult to fully anticipate.

Shortages of lubricants and greases will impact all of industry, since every machine requires them.

Shortages of sulfur — a byproduct of oil refining — will curtail sulfuric acid production, the single most widely used chemical in the world, present across countless production chains. Mining will be severely affected; losses in copper and nickel mining will reverberate through everything that depends on electricity, including batteries, which in turn will set back the global clean energy transition. Sulfuric acid also figures in urban water and sewage treatment, oil refining, and the manufacture of steel, textiles, pulp and paper, rubber, leather, chemicals, pharmaceuticals, and cosmetics.

Shortages of helium gas — a byproduct of natural gas liquefaction — will threaten microchip production and therefore all electronics supply chains. Even medical MRI machines will be affected, since they require helium to operate (China has just halted its helium exports).

Before the war, Persian Gulf countries also supplied a substantial share of world aluminum exports.

Taken together, all of this will inevitably destabilize the global financial system.

These repercussions are so vast, and so far-reaching, that they cannot be fully grasped until they radiate outward — producing effects, and then effects of those effects. Already at the war’s outset (March 4th, just five days after fighting began), Craig Tindale sketched a general framework for how these disruptions would cascade: twelve sequential transformations unfolding over more than five years, culminating in a broad civilizational reorganization of the world, according to him.

The war has just started again, but even if it had actually ended, these repercussions would still be felt (see, for example, this video). The wishful thinking prevalent in financial markets — the eagerness for a “return to normal” — is likely to be disappointed. Apart from the months that would be needed for maritime traffic to gradually recover and global supply chains to reach whatever normalization would still be possible (a full return to pre-war levels is already out of the question; see this video, minutes 55′ to 59′45″), there are several additional obstacles:

The bombing of oil and gas facilities caused physical damage that will keep part of the supply offline for years. Resuming production from wells that were forcibly shut down after storage capacity was exhausted — a problem that bears far more heavily on the Gulf states than on Iran, which has spent decades managing precisely this under the pressure of sanctions — will be both slow and incomplete. Shipowners and insurers carry enormous costs — the value of the vessel and its cargo, extended crew deployments, fuel, port and customs fees, and much more. They will need to feel genuinely secure before routing ships through the Strait again. To illustrate: the Houthis stopped attacking commercial shipping in the Bab el-Mandeb Strait over a year ago, yet traffic through the Red Sea has recovered to only 75% of pre-attack levels (watch this video from minute 6′15″). Why? Simply because the Houthis are still there (so they might now close Bab-el-Mandeb again). The Iranians, likewise, will remain stationed along Hormuz. Analysts estimate — though they cannot predict — that even if Hormuz were reopened today, traffic by year-end would reach only about 40% of pre-war levels (see this video at 1′20″). For a synthesis of all the above, watch this video starting at minute 27′15″.

The bombing of oil and gas facilities caused physical damage that will keep part of the supply offline for years.

Resuming production from wells that were forcibly shut down after storage capacity was exhausted — a problem that bears far more heavily on the Gulf states than on Iran, which has spent decades managing precisely this under the pressure of sanctions — will be both slow and incomplete.

Shipowners and insurers carry enormous costs — the value of the vessel and its cargo, extended crew deployments, fuel, port and customs fees, and much more. They will need to feel genuinely secure before routing ships through the Strait again. To illustrate: the Houthis stopped attacking commercial shipping in the Bab el-Mandeb Strait over a year ago, yet traffic through the Red Sea has recovered to only 75% of pre-attack levels (watch this video from minute 6′15″). Why? Simply because the Houthis are still there (so they might now close Bab-el-Mandeb again). The Iranians, likewise, will remain stationed along Hormuz. Analysts estimate — though they cannot predict — that even if Hormuz were reopened today, traffic by year-end would reach only about 40% of pre-war levels (see this video at 1′20″).

For a synthesis of all the above, watch this video starting at minute 27′15″.

The Global Food Crisis

Food supply chains — fertilizers, pesticides, agricultural machinery, diesel, lubricants, transport — will be as disrupted as any other. But food is our central concern, because it is indispensable to human survival. If garbage bags disappeared from supermarket shelves (they are made of plastic, which is made of polymers, which are made of naphtha, which comes from oil), people would cope — they would wash their trash cans. There is no equivalent workaround for a food shortage.........

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