FAO warns: Wars and El Niño create risk for food prices
The UN food agency's chief economist predicts that prices of staple foods will start rising more sharply by the end of the year, and even more strongly next year.
The UN food agency's chief economist predicts that prices of staple foods will start rising more sharply by the end of the year, and even more strongly next year.
The world is on the brink of a new wave of food price increases, warned Maximo Torero, chief economist of the United Nations Food and Agriculture Organization (FAO), on Thursday, August 6, 2026. The combination of wars in Iran and Ukraine, disruptions in key maritime passages, and extreme weather conditions has created, as he described, a "perfect storm" threatening global food supply security.
After food prices were a major driver of inflation worldwide in 2022, they have been relatively stable so far this year. However, Torero, in an interview with Reuters, warns that this is merely the calm before the storm. Higher oil prices, shortages of synthetic fertilizers from the Persian Gulf region, and diesel shortages in parts of the world are continuously increasing production costs, which will inevitably spill over into final consumer prices.
"I expect that prices of basic agricultural products will now begin to rise more sharply... and that by the end of the year, food prices will also start to rise," Torero told Reuters. He added that next year, price increases will certainly be even stronger. The economist explained that the pass-through from basic agricultural product prices to final food products typically takes three to six months, meaning that current pressures in commodity markets could be felt on store shelves by early 2027.
Although prices of wheat, corn, and rice have risen in recent months, Torero points out that they still largely reflect last year's relatively good harvest, not upcoming difficulties. He placed special emphasis on the Strait of Hormuz, a crucial global shipping artery. "The Strait of Hormuz is a problem that affects all inputs for basic agricultural products and agricultural systems," he said, reminding that oil is used in packaging, processing, and transportation, and natural gas as a feedstock for synthetic fertilizer production.
The problem is profoundly global. "This is being discussed in Europe, the US, Brazil, and Asia," Torero stressed, explaining that weak earnings are already affecting farmers' planting decisions. As an example, he noted that some American producers have shifted to soybean cultivation because it requires less synthetic fertilizer.
The American Farm Bureau Federation, an association of US farmers, has published a concerning estimate that farmers growing nine staple crops could suffer losses of $32 billion next year if the federal government does not step in to help. Their analysis predicts that in 2027, each of these crops will remain below the profitability threshold.
Meanwhile, weather calamities are further exacerbating the situation. In Australia, one of the world's largest food exporters, the winter crop harvest is expected to be 21 percent smaller, partly due to high fuel and fertilizer prices. This year's El Niño phenomenon, which is forecast to be exceptionally strong, is already altering rainfall patterns. In India, the monsoon is delayed, and rainfall since the beginning of August is below average, threatening reduced rice production and consequently higher prices for this staple food on the global market.
