00:00Well, for more insight now, let's speak to Peter Alexander, Professor of Global Food Systems at the University of Edinburgh.
00:07Professor Alexander, great to have you on the show.
00:09So, the street of Hormuz is not only important for energy supplies, but apparently also for agriculture.
00:16Yeah, that's absolutely correct.
00:18So, agriculture is very dependent on the fossil fuel sector.
00:24Since the Green Revolution, we use a lot of inorganic fertiliser, inorganic nitrogen being the most widely used fertiliser.
00:33And that's produced from natural gas primarily, and sometimes coal, through the harbour wash process.
00:41And obviously, because of the abundance of fossil fuels in the Gulf region, obviously, they are a major player in
00:47production of urea,
00:50which is the major form of inorganic nitrogen fertiliser.
00:57And, you know, as you said, as the person who was part of that package correctly said, roughly a third
01:05of urea passes through the Straits of Hormuz in normal times.
01:11And that obviously has been disrupted with this conflict.
01:15The one thing that, although that was exactly correct, it's not true to say that a third of urea on
01:24the global supply of urea is from the Gulf,
01:27because a lot of urea is produced and consumed actually in the same country.
01:33Because all you really need is that natural gas and the facilities to do it.
01:36There's no kind of other natural resource you require.
01:39So it's more like something like 10% of, maybe a little bit less, of urea is actually supplied through
01:47the Gulf, or from the Gulf.
01:49Well, Professor, I think for a lot of viewers who are currently watching,
01:53they are just concerned how much that will increase food prices at the end of the day.
01:58In the supermarkets, when do we see that reflected?
02:02Yeah, so absolutely.
02:03And there's two kind of obvious, well, two kind of clear mechanisms that that increase of food prices is likely
02:12to occur through.
02:15The first, if you like, is a direct mechanism.
02:16You know, if farmers' input costs go up because the fertilizer they need to use to produce the crops increase
02:21in price,
02:22then that's passed through eventually to consumers.
02:25But there's a sort of an indirect mechanism that's actually probably more important and maybe slightly less obvious,
02:32which is that, you know, farmers might choose to not establish those crops or maybe to fertilize less.
02:38And then as a result of those type of decisions, there's less supply of food entering the market.
02:46And that also feeds through to much higher or potentially much higher food prices if that occurs at a great
02:53scale.
02:54Because obviously we've got similar demand chasing sort of less supply.
03:01So that sort of indirect change in farmer choices, farmer behavior, leading to sort of lower production of food is
03:10really a concern.
03:13There's a lead time involved in that.
03:14You know, as you've heard in your package, farmers are having to, always have to make decisions ahead of time.
03:20You know, what crops to plant, planting season that was harvested six, nine, twelve months later, depending on what they're
03:30growing and where.
03:32So the sort of issues can get baked into the system based on the context, the market context in which
03:41many people are making decisions around the world.
03:45So, yeah, it's a complex system.
03:47It is rather complex.
03:48And I'm afraid that we're all concerned about food prices already.
03:52OK, thank you very much.
03:53That is Professor Peter Alexander from the University of Edinburgh.
03:56Thank you very much for your insight.
03:58Thank you very much.
