Dairy and Agriculture Leaders Say Iran War Could Eclipse COVID Supply Chain Crisis

Australian agricultural producers are warning that the expanding conflict involving the United States, Israel, and Iran could trigger widespread food shortages and significant price increases that may persist for a year or longer.

The gravity of the situation centers on the Strait of Hormuz, through which a substantial portion of global petrochemical supplies must pass. Should this critical waterway remain disrupted, the ripple effects will extend far beyond fuel shortages to encompass fertilizer supplies and the petroleum-based resins required for basic food packaging.

Michael Hampson, chief executive of Norco, a dairy farmer cooperative operating in northern New South Wales and Queensland, delivered a stark assessment of the timeline facing consumers and producers alike. In a best-case scenario, he anticipates six to twelve months of supply chain disruption, contingent upon the swift reopening of the Strait of Hormuz and stabilization of global petrochemical networks.

“If it is not resolved promptly, as in the next week or two, the fallout for this event is going to make COVID look like a tea party,” Hampson stated. “We will not be worried about running out of toilet paper. We will be worried about not having food.”

While immediate milk shortages appear unlikely, Hampson indicated that consumers should prepare for price increases in the short term, suggesting that additional costs of thirty to fifty cents per liter would not be unreasonable under current circumstances.

The longer-term challenges facing primary producers present an even more concerning picture. Some farmers are already paying more than double their previous costs for fertilizer, while others report an inability to secure diesel fuel deliveries entirely. Without operational tractors, critical planting windows will be missed. Scarce fertilizer supplies will likely result in diminished crop yields in coming seasons.

Norco’s milk processing facilities, which do not rank among the nation’s largest operations, are already confronting an additional one million dollars in monthly fuel costs. Beyond the freight expenses affecting all regional industries, the dairy sector faces unique supply constraints. Milk bottles are manufactured from fossil fuel resins, and without restored global supply chains, these plastics will become impossible to source.

“Then it does not matter how much it costs, because we will not have anything to put the milk in,” Hampson explained.

The fruit and vegetable sector is calculating a similar timeframe for supply disruption. Michael Crisera of Fruit Growers Victoria noted that the crisis has arrived at an particularly inopportune moment, coinciding with the beginning of apple harvest season.

“We are nervous, without trying to panic,” Crisera said.

While the current harvest benefits from lower diesel requirements and the ability to store the crop, the critical juncture will arrive when fruit must move from packing facilities to supermarkets. Transport costs for deliveries have already doubled compared to pre-war levels, according to Crisera’s assessment.

“Unfortunately, our costs are going to increase with every box. We need to be able to pass that on,” he stated.

Crisera acknowledged it remains too early to determine precise cost increases for consumers, but emphasized that growers are already more vulnerable than they were during the pandemic period.

Stephen Lowe, deputy chair of Banana Growers Australia, indicated his industry faces a similarly acute crisis, though the article’s conclusion was unavailable.

The situation underscores the interconnected nature of global supply chains and the vulnerability of food production systems to geopolitical instability in distant regions. What occurs in the Strait of Hormuz does not remain in the Middle East. It reaches Australian dinner tables and affects the fundamental economics of feeding a nation.