Food prices are set to soar: the global food market is expected to face a new wave of price increases by the end of the year
6 August 13:22
The global food market could face a new wave of inflation as early as the end of 2026 due to the combined effects of the wars in Ukraine and Iran, which are creating a “perfect storm” for the agricultural sector.
This was stated by Maximo Torero, chief economist of the Food and Agriculture Organization of the United Nations (FAO), according to UkrAgroConsult, as reported by "Komersant Ukrainian".
“According to the FAO’s assessment, the main risks of rising food prices include rising oil prices, disruptions in fertilizer supplies from the Persian Gulf region, a shortage of diesel fuel, extreme weather events, and the expected intensification of El Niño,” the publication writes.
Torero noted that the war is having a significant impact on energy markets: the situation around the Strait of Hormuz is complicating the supply of energy resources and fertilizers, while Ukraine’s strikes on Russia’s oil and gas infrastructure are limiting exports of diesel fuel and natural gas. According to him, this has global consequences, as diesel is essential for field work and the transportation of agricultural products, and natural gas is a key raw material for the production of nitrogen fertilizers.
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Rising production costs are already influencing farmers’ decisions regarding crop rotation. In particular, in the U.S., some farmers are switching from growing corn to soybeans, which require fewer fertilizers. Australia forecasts a 21% decline in winter crop production due to rising fuel and fertilizer prices and uncertainty regarding their supply. An increasing number of farmers in various countries are forced to operate at minimal profit margins.
“The predicted intensification of El Niño remains an additional threat to the global agricultural sector. Torero noted that India is already experiencing a delayed monsoon season and is expected to face a shortage of rainfall, which could negatively impact rice yields,” the publication writes.
The FAO believes that a combination of geopolitical tensions, high energy prices, and adverse weather conditions could trigger a new surge in global food prices and exacerbate food security issues in many countries.
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