FAO warns of a new wave of global food price inflation

The world could face a new wave of food inflation by the end of 2026, according to Máximo Torero, Chief Economist of the UN Food and Agriculture Organization (FAO), in an interview with Reuters. He said that the wars in Ukraine and Iran, combined with the expected strengthening of the El Niño weather pattern, are creating a “perfect storm” that is driving up production costs and threatening future crop yields.

FAO believes the current period of relatively stable food prices is only temporary. Higher crude oil prices, disruptions to fertilizer supplies from the Gulf region, diesel shortages, and increasingly extreme weather are steadily raising agricultural production costs. Because it typically takes three to six months for commodity price increases to reach consumers, food prices are expected to rise toward the end of this year.

Torero also highlighted the impact of the war on global energy markets. According to him, tensions around the Strait of Hormuz are disrupting energy and fertilizer supplies, while Ukrainian strikes on Russia’s oil and gas infrastructure are limiting exports of diesel fuel and natural gas. Both are essential inputs for agriculture, as diesel powers farm machinery and transport, while natural gas is the key feedstock for nitrogen fertilizer production.

Rising production costs are already influencing farmers’ planting decisions. In the United States, some growers are shifting from corn to soybeans because soy requires less fertilizer, while Australia expects winter crop production to decline by 21% due to higher fuel and fertilizer costs and uncertainty over input supplies. Torero noted that farmers across many regions are operating with increasingly tight profit margins.

Another major risk is the expected strengthening of El Niño, which could significantly alter global rainfall patterns. India is already experiencing delayed monsoon rains and below-average precipitation, posing risks to rice production. FAO warns that the combination of geopolitical tensions, higher energy costs, and adverse weather could trigger another surge in global food prices and worsen food security for millions of people worldwide.

Tags: food security, prices, FAO