Iran conflict: Is ceasefire too little, too late for global food?

Iran war and ceasefire summary: What happened and why it matters

• The US and Iran have announced a two‑week ceasefire.
• Iran agreed to temporarily reopen the strait under Iranian military coordination, but control and access are disputed.
• Both the US and Iran have declared victory.
• Global dependence on Middle Eastern fertiliser dependence is high.
• Thailand is already under strain, importing over 40% of its fertiliser via the strait and facing fertiliser prices more than triple pre-crisis levels.
• Negotiations begin April 10 in Pakistan but remain fragile, with Iran warning the war ‘is not over’

On Tuesday April 7, United States President Donald Trump set 8pm Eastern Time (EDT) on Wednesday April 8 as a deadline for Iran to open the Strait of Hormuz or face the possibility that ‘a whole civilisation will die’ at said time.

Reactions to this threat were mixed and varying, ranging from outright condemnation from the United Nations and Pope Leo, to widespread online nonchalance where many netizen comments referred to Trump’s repeated postponements on delivering the destruction he kept threatening since March 21.

Nonetheless, the tension was more palpable this time around after he escalated to threatening to decimate an entire civilisation, and just two hours before the 8pm deadline, a two-week ceasefire was announced between both sides, 39 days since the war first started.

Iran has now agreed to temporarily reopen the Strait of Hormuz, the vital waterway through which around a quarter of the world’s oil and some 30% of global fertiliser passed daily before the war, but ships will be passing only under Iranian military coordination.

This agreement allows some breathing room for all parties involved after over five weeks of tension, with a silver lining that oil, fertiliser and other commodities will now be able to move through the strait. But there are still many, many unanswered questions that must be addressed before everyone — and the food industry in particular — can breathe easy.

So, who won?

Ironically, this most basic of questions still remains fundamentally unanswered as both sides have declared victory.

The Iranian Supreme National Security Council has issued a statement that the strait remains fully under its control, and it is not yet certain whether this is a term that has been accepted by the US.

“Iran has achieved a massive victory and forced criminal America to accept [our] 10-point plan. [We] congratulate all the people of Iran on this victory,” the council said via a formal statement.

“In this plan, America is fundamentally committed to guaranteeing non-aggression, the continuation of Iran’s control over the Strait of Hormuz, the acceptance of enrichment, the lifting of all primary and secondary sanctions, the termination of all resolutions of the Security Council and the Board of Governors, the payment of Iran’s damages, the withdrawal of US combat forces from the region, and the cessation of war on all fronts, including against the heroic Islamic Resistance of Lebanon.”

Despite the tone of victory in this statement, this ceasefire is by no means set in stone — for one, Trump has also declared victory in this war for the US.

“Total and complete victory. 100%. No question about it,” were his words in a phone call with AFP.

He also posted on social media both that the US had ‘met and exceeded’ its military objectives, and the ceasefire was subject to Iran ‘agreeing to the COMPLETE, IMMEDIATE and SAFE OPENING of the Strait of Hormuz’, a statement that is entirely at odds with Iran’s stand that the strait remains fully under its control.

This, along with the situation surrounding Iranian uranium enrichment that supposedly started the whole war, will be negotiated between both parties over the next two weeks, which essentially means that things are still very much up in the air.

What does this mean for the global food sector?

Fertiliser is one of the major commodities going through the Strait of Hormuz, and the availability and price of this has massive impacts on the global food industry.

Many of the world’s largest fertiliser production facilities are located in the Middle East, and many raw materials needed for fertiliser production also depend on exports from this region.

Case in point, Saudi Arabia and Iran are the third and fourth-largest exporters of urea (for nitrogen fertiliser) in the world, and around 45% of sulphur also comes from the region.

Dependence on the Middle East for fertiliser is hence extremely high — according to the Observatory of Economic Complexity, agriculture-dependent countries such as Pakistan, India, Australia and New Zealand import a great deal of their fertiliser from this region at 31%, 25%, 27% and 26% respectively.

The United States received 13% of its fertiliser supply from the Middle East, and Mexico gets 11%.

As such, a lack of fertiliser from the region would mean likely crop failures for food items from corn to rice, what and sugarcane; and secondarily would affect livestock feed and affect foods such as meat and dairy, causing prices in all of these categories to go up.

“There is also the consideration that if fertiliser supply tightens, farmers may reduce application and usage, which [would affect yields] and further increase prices,” Wolfe Research chief economist Stephanie Roth stated.

Thailand in particular has been feeling the pressure on multiple fronts — On March 10, oil and gas supply concerns led the government to mandate all non-public facing civil servants to work from home, as well as for government servants in general to implement energy saving measures such as using stairs instead of elevators and suspending overseas trips.

At the time, the country’s Energy Minister Auttapol Rerkpiboon had estimated remaining energy reserves to be enough for just over 90 days.

“For government servants coming to the office, air conditioning temperatures will be set at 26°C to 27°C to conserve energy. People will be able to wear short-sleeved shirts instead of formal suits and ties,” Prime Minister office spokeswoman Lalida Periswiwatana said.

“They have also been ordered to switch off lights and electric equipment when not in use to reduce electricity at the office, and the public will also be requested to use energy saving measures such as carpooling.”

But all this may not be enough — Thailand is also a very agriculturally-centric market, and fertiliser is very crucial to its economy, with its food sector now at high risk due to the fertiliser situation.

“Thailand imports over 40% of our chemical fertilisers through the Strait of Hormuz — There is a strong need to negotiate with other countries such as Russia and China to expand and diversify our import sources,” Thammasat University agri-technology lecturer Worapat Wachirayakorn said.

“The situation was already very perilous due to the Russia-Ukraine war, and now it is even more severe with fertiliser prices increasing by over three times. Is this goes on, the prices of rice, vegetables and palm oil will go up.”

Thailand may be one of the first to be affected in this manner by the conflict, but its situation is by no means unique. Every country faces similar risks if the ceasefire does not work out, and the strait is closed once more.

What happens if negotiations fail?

Even with the strait reopening now, the overarching uncertainties are still rife: Will Iran be imposing toll fares for passing? Will fertiliser production sites in the Middle East be able to reach pre-war production levels? How much risk will food and agriculture firms worldwide be willing to take to sourcing most of their fertiliser from this region again?

But most pressing of all: Will the negotiations work, and what terms will be agreed to?

As it is, the signs are not yet all that encouraging: To begin with, Iran’s Supreme National Security Council has clearly stated that this is ‘not the end of the war’.

“Negotiations will begin in Islamabad, Pakistan on Friday April 10, with complete distrust of the American side, and Iran will allocate two weeks for these talks,” said the council.

“It is emphasised that this does not mean the end of the war; Iran will only accept the termination of the war once the details — given the acceptance of Iran’s preferred principles in the 10-point plan — are finalised in the negotiations.”

In addition, Israel has already made its position clear that not all of Iran’s demands will be acquiesced to.

“Israel supports President Trump’s decision to suspend strikes against Iran for two weeks subject to Iran immediately opening the straits and stopping all attacks on the US, Israel and countries in the region,” Israel Prime Minister Benjamin Netanyahu’s office said via a statement.

“The two-weeks ceasefire does not include Lebanon.”

This was in direct contrast to the words of Pakistan Prime Minister Shehbaz Sharif who had posted on X that the ceasefire would include ‘Lebanon and elsewhere, EFFECTIVE IMMEDIATELY’. Pakistan has positioned itself as the broker of peace for this war, so this contradiction is not encouraging indeed.

News out of Iran’s public-linked Tasnim News has indicated that there are plans to charge transit fees or tolls for ships pasting through the strait during the two-week ceasefire in order to help local rebuilding efforts, but this has yet to be confirmed.

Is it too late?

The other major question that faces the global food industry, and indeed everyone is this: Has the ceasefire come too late?

Before the ceasefire was announced, the US and Israel had attacked Iran’s South Pars petrochemical complex, a facility that makes up some 85% of its petrochemical output. Iran responded by striking Saudi Arabia’s largest petrochemical complex in Jubail Industrial City, a zone that contributes 60 million tons or some 7% of all global petrochemicals.

“This is a dire threat to food and medical security,” said analyst Reza Ramezannejad.

“A simultaneous shutdown of Iran’s petrochemicals and Saudi’s SABIC would trigger a global industrial ‘cardiac arrest’ — removing some 20% of the world’s trade in methanol, urea, and polymers would spike global inflation by 1.5% to 2%.”

So even if/when the strait reopens, what is clear is that things will not be returning to the way they were before, whether it is for how the Middle East operates, how the world views the US, or for global food supply chains — and food companies all over the world are going to need to adapt to this new reality quickly.