Excerpts from an article by Adam Hanieh on the FT
“The new high-yielding varieties of the Green Revolution, by contrast, could only deliver their promised output through large and repeated applications of industrial fertilisers, especially nitrogen-based products such as urea and ammonium nitrate. Since many of these fertilisers are derived from natural gas, the Green Revolution meant that the world’s food production became ever more closely tied to a constantly increasing supply of hydrocarbon inputs.
“Doubts have long been expressed about the sustainability of this fossil fuel-based food system. But as oil and gas prices have risen steeply amid the US-Israeli war on Iran and a significant part of the global fertiliser trade has been brought to a standstill, its potential vulnerabilities have been made clear.
“The current moment differs from those earlier crises in one crucial respect. During the past two decades, Gulf monarchies such as Saudi Arabia, Qatar and the United Arab Emirates have come to occupy a far more central place in the global food economy than is often recognised. The Gulf states now shape the production and circulation of food directly, supplying key chemical inputs, exporting large volumes of finished fertilisers and controlling the logistical corridors through which food and agricultural commodities move across much of the Middle East, central and east Asia and Africa.
“That deeper integration with the global food system is what makes the ongoing conflict both different from, and potentially far more serious than, earlier price shocks. A shock in the Gulf can now cascade rapidly through the supply chains that carry food from the farm to the shelf.
“Companies such as Saudi Aramco and the Abu Dhabi National Oil Company (Adnoc) have used these windfall revenues to fund industrial diversification into chemical production. A key example here is ammonia, which the International Energy Agency describes as making “an indispensable contribution to global agricultural systems” and is the starting point for all mineral nitrogen fertilisers. About 70 per cent of the world’s ammonia is used in fertiliser production, and just under 30 per cent of global ammonia exports originate in the Middle East. Saudi Arabia is the world’s second-largest exporter of ammonia, while Oman ranked sixth in 2024.
“Sulphur is another crucial basic input into modern agriculture. While less visible than ammonia, it is used to make the sulphuric acid needed to turn phosphate rock into phosphoric acid and, from there, phosphate fertilisers. Roughly half of the world’s global seaborne sulphur passes through the Strait of Hormuz, with most of this produced by the Gulf’s state-owned energy companies — above all Adnoc, QatarEnergy, the Kuwait Petroleum Corporation and Saudi Aramco. Morocco, home to the world’s largest phosphate industry, is the biggest sulphur importer globally, with about three-quarters of its 2024 imports coming from the Gulf.
“The UN Trade and Development’s March assessment of the Strait of Hormuz, for instance, found that Sudan imported 54 per cent of its fertilisers by sea from the Gulf region in 2024, the highest share in the world. It was followed by Sri Lanka at 36 per cent, with Tanzania at 31 per cent, Somalia at 30 per cent, and countries such as Kenya and Mozambique also heavily exposed. Unlike the US and EU, these states do not have the existing fiscal or borrowing capacities to extend subsidies to farmers and poorer populations in the event of any major food price shock.
“As war drives up energy and food prices, inflationary pressures push interest rates higher, while investors retreat towards the US dollar and other safe assets. The result is that finance becomes both scarcer and more expensive for poorer countries, as lenders demand a higher premium to hold their debt.
The number of developing countries that are now paying more to their external creditors in debt servicing than they receive in fresh loans has doubled during the past decade. A total of 3.4bn people in the global south live in countries that spend more on interest payments than health or education.”
Obviously, Hanieh, commissioned by the FT to write this article was unable to point to the structural causes with the functioning of a profit-based system – capitalism. Thus the comments on his article by most liberals either blame Iran or justify the system. No one questions capitalism.
Related
Here is where Hanieh integrates the topic in capitalism
The new colonialist food economy
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