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The Middle East shipping gridlock risks a regional hunger crisis unless Asean resists export controls and pushes a US-Iran deal, experts say

A hunger crisis could creep up on Southeast Asia if the region does not guard against export restrictions amid a fertiliser shortfall, International Chamber of Commerce (ICC) Secretary General John Denton has warned.

On the sidelines of the Future of Trade Forum in Singapore on Wednesday, Denton urged the city state, as the next Asean chair, to prioritise the “sleeper issue” for the region. He argued that the real story centred on food, despite the Strait of Hormuz gridlock being widely seen as an energy crunch.

He noted that the UN was able to carve out the Black Sea Grain Initiative during the Russia-Ukraine war by getting both sides to sign off on an agreement that allowed for the safe export of grain from certain ports, alleviating a global food emergency.

Under a UN-led task force on Hormuz, the ICC is involved in trying to implement a similar initiative through the troubled strait. However, the United States and Iran have yet to sign off on the plan.

“The context of Hormuz is different, but the actual elements of it are similar, in that you’ve got a trade route which has been effectively frozen, militarised,” Denton told This Week in Asia.

The ICC is a global business organisation representing companies and associations across more than 170 countries.

Many member states of the Association of Southeast Asian Nations – including Thailand, the Philippines, Cambodia and Myanmar – rely heavily on imported phosphate, potash and nitrogen fertilisers from outside the region.

Asean producers currently focus on managing domestic price caps and subsidies rather than restricting regional exports. Indonesia, for instance, uses domestic market obligations and fertiliser subsidies to protect its local agricultural sector.

However, about one-third of the global seaborne fertiliser trade passes through the Strait of Hormuz. The ongoing conflict in the Gulf has severely disrupted shipping routes, causing major supply bottlenecks and price surges.

The consequences of restricted access to fertiliser were not immediate, Denton noted, as it took 12 months to see the effects on crops and would be compounded by El Nino.

“Politicians focus on the problems of today, but this is what you call a sleeper issue,” he warned, pointing to a solution that hinged on an agreement between Washington and Tehran, overseen by the UN’s secretary general office.

On the role Asean could play to help itself, Denton stressed it was very important for member states not to introduce export controls.

“A number of economies around this region have actually inhibited access to fertiliser movement to try and protect their own suppliers. That distorts market conditions, and that actually adds to price increases,” he said.

This issue should be a key focus of Singapore’s tenure as Asean chair in 2027, Denton added.

“Asean maintaining its focus and action against any export controls is very important. To actually ensure that there’s focus on this at the United Nations – and that they’re vocal in their support of getting something done to avert a food crisis – would be very important,” he said.

While the US and Iran have engaged with the proposal and understand the mechanism, Denton noted that they had yet to agree. “The issue is: do they want to be responsible for the political consequences of hunger in developing emerging economies? It’ll come from a failure to deploy this.”

In a keynote address at the forum, Singapore Minister-in-charge of Trade Relations Grace Fu said that as chair, the city state aimed to deepen integration, strengthen Asean’s capacity to respond to change and expand the regional bloc’s partnerships with existing and new allies.

Fu, who is also Minister for Sustainability and the Environment, said: “Taken together, these efforts are about giving businesses more pathways to grow and more options to navigate disruption – by opening new markets, strengthening connectivity and keeping trade flowing even in times of uncertainty.”

During a fireside chat, Fu stressed that Singapore saw itself as a trusted anchor in a “very unpredictable, uncertain world”.

She said that Singapore’s port had been very busy since the disruptions in the Strait of Hormuz as it had served as a hub for countries forced to divert goods and restructure their logistics.

“If you have a disruption in trade rules and therefore you need to rearrange your supply chain, Singapore would be the place for you to do that because we have the fundamental infrastructure, fundamental processes that probably reach the most number of countries, the shipping connectivity and so on,” Fu said.

Source : scmp