A Learning Conversation with Francisco Martin-Rayo, CEO of Helios AI
Francisco Martin-Rayo, CEO and co-founder of Helios AI, an AI-powered climate risk and commodity intelligence platform trac, joined a recent CASH Coalition learning session. His warning was clear: the closing of the Strait of Hormuz is leading to a potential food crisis, and it is already unfolding.
Hormuz is a fertilizer chokepoint. Helios AI estimates that between 30 to 50 percent of the world’s urea moves through the Strait, and attacks on production capacity in Qatar have further tightened supply.
For smallholders, the result is potentially a brutal chain reaction: less fertilizer means lower yields; lower yields mean less food and income; lower income means less capacity to buy seed, fuel, and fertilizer next season. A price shock means fertilizer costs more. A supply shock means fertilizer may not be available at any price. In a worst case scenario, synthetic inputs may not be available at any price.
The timing makes the risk sharper. Helios AI noted that many farmers in the United States and Europe had already purchased inputs before the disruption. The greater exposure now sits in the Southern Hemisphere and parts of Asia, where farmers must buy fertilizer in June, July, and August for planting later in the year. Myanmar is already seeing input costs rise by more than 60 percent, while Brazil’s input-buying window falls directly inside the disruption period.
Reopening the Strait will not immediately solve the problem. Martin-Rayo explained that three barriers remain: demining the Strait, reducing insurance costs, and persuading captains to transit again. Based on Helios’s discussions with naval experts, recovery could take up to two and a half years. Even then, oil is likely to move before fertilizer.
El Niño will further complicate the forecast. For agriculture, El Niño means drought in some places, floods in others, and heightened risks for rice in South and Southeast Asia, maize in parts of Sub-Saharan Africa, and soy, corn, and grains in South America.
This interaction is the danger. El Niño on a well-capitalized farm is a management challenge. El Niño on an under-input smallholder farm, amid high fuel costs, weak currencies, expensive credit, and uncertain seed supply, is a livelihood crisis. CASH members flagged hidden risks: One Acre Fund warned that fertilizer scarcity could become seed scarcity, especially for hybrid maize; Proximity Designs noted that inflation and higher interest rates could choke off farm credit and that low rice prices are already discouraging farmers from investing in inputs.