The war in the Middle East, Russia’s aggression against Ukraine, disruptions to energy markets and extreme weather could combine to trigger a new global food crisis. The warning signs are there, but a crisis is not inevitable. Much will depend on how long conflict-related supply disruptions last and how next year’s harvests turn out in the world’s major agricultural regions.
English translation of an opinion article originally published in Äripäev.
In recent months, the world’s attention has focused primarily on the impact of the war in the Middle East on oil and gas prices. Disruptions to shipping in the Strait of Hormuz, interruptions in energy supplies, and rising prices have led to yet another energy crisis. Far less has been said about the fact that these same events could also pose a serious threat to the world’s food supply.
A comprehensive analysis recently published by the S&P Global Institute draws attention to this. The report’s central message is that global agriculture is facing multiple simultaneous pressures. On the one hand, the war in the Middle East and Russia’s aggression in Ukraine are disrupting international trade in energy, fertilisers, and foodstuffs. On the other hand, the intensifying El Niño weather phenomenon threatens to reduce harvests in several of the world’s most important agricultural regions.
None of these factors alone would necessarily cause a global food crisis. The problem lies in their combined impact. Rising energy prices increase the costs of fertiliser production, farming, and transport. Fertiliser shortages are forcing farmers to reduce their use of fertilisers, which in turn may lower crop yields. If droughts or floods are added to all of this, the consequences could be far more serious than if these disruptions occurred individually.
How the energy crisis reaches our dinner tables
Modern agriculture depends on energy far more than it might seem at first glance. Natural gas is the primary raw material for producing nitrogen fertilisers; sulphur is essential for manufacturing phosphorus fertilisers; and diesel fuel powers tractors, combine harvesters, irrigation pumps, and much of the transport used to move agricultural produce.
The impact of the energy crisis therefore goes beyond higher fuel and electricity prices. It ripples through the entire food production chain, from sowing to the moment food reaches store shelves.
The Middle East’s importance in this system has proved greater than previously realised. The Strait of Hormuz typically handles about one-fifth of the world’s oil flows and a significant portion of the liquefied natural gas trade. At the same time, this sea route also carries approximately 29 percent of the internationally traded urea—one of the most important nitrogen fertilisers—and as much as 47 percent of the world’s sulphur trade.
Sulphur, in particular, could prove to be one of the most serious bottlenecks. While it is possible to replace some Middle Eastern supplies of urea with products from other producers, there are fewer alternatives in the sulphur market. Sulphur is largely produced as a byproduct of oil refining and natural gas processing, and its production cannot be rapidly increased simply because agriculture needs more fertiliser.
The consequences are already evident. Sulphur exported from the Middle East cost approximately $500 per tonne at the beginning of this year. Its price rose to a record $1,000 in July, then fell somewhat by the end of September while remaining exceptionally high. OCP, a major Moroccan fertiliser producer, was forced to cut production of some phosphate fertilisers by up to 30 percent in the second quarter.
This example clearly illustrates the interdependence of the global economy. A military conflict in the Persian Gulf region could limit fertiliser production in North Africa and ultimately affect agricultural yields in South America or Asia.
The most vulnerable are countries that depend on imports of both energy and fertilisers. In Bangladesh, for example, four out of five urea plants have been shut down since March due to a shortage of liquefied natural gas. India has managed to maintain production better, but at the cost of expensive alternative gas supplies and increasing government subsidies.
The question is not simply whether there will be enough fertiliser. Equally important is whether farmers can afford to buy it.
Diesel fuel shortages and farmers’ choices
Another major source of pressure is diesel fuel. The Middle East and Russia typically account for about half of the world’s net diesel exports. Military operations, damage to refineries, and export restrictions have sharply reduced this supply.
According to S&P Global, the supply of internationally traded diesel fuel has fallen by approximately two million barrels per day. In early September, the price differential between diesel fuel and crude oil exceeded $100 per barrel, compared to the usual $12–20. The International Energy Agency has also warned that the diesel shortage could persist into 2027.
For farmers, this poses a very practical problem. When both fuel and fertiliser prices rise at the same time, they must decide where to cut back. Should they use less fertiliser, cultivate a smaller area of farmland, or postpone some investments?
These decisions may make sense from the perspective of a farm’s survival, but their cumulative impact on the global market is dangerous. Less fertiliser often means a smaller harvest. If farmers in Brazil, India, Europe, and Africa make similar decisions at the same time, the world’s total food production potential will begin to decline. The savings from reducing fertiliser use may ultimately be outweighed by the loss of revenue caused by lower yields. However, a farmer facing financial difficulties cannot always act based on long-term economic rationality.
This is one distinctive feature of the current situation. Unlike oil prices, which react to conflicts almost immediately, the impact of rising agricultural costs only becomes apparent several months later. Today’s decisions regarding planting and fertilization will largely determine the 2027 harvest.
When food becomes fuel
An analysis by S&P Global also highlights a contradiction that has received little attention so far. High fossil fuel prices make biofuels more economically attractive and increase demand for the crops used to produce them.
Thus, crops that were previously grown mainly for food or animal feed may become more profitable as feedstock for fuel.
This is most evident in Indonesia, where the industrial use of palm oil—largely for biodiesel production—is projected to reach 18.4 million tonnes in 2026–2027. This is approximately five times more than it was ten years ago.
A similar trend is also affecting agriculture in Europe and Australia. Due to the demand for biofuels, growing rapeseed and other oil crops may become more profitable than producing wheat or barley. At the same time, some of these crops require relatively large amounts of fertiliser, the price of which is already high.
Of course, this does not mean that the use of biofuels should be discontinued. They play a role in reducing transport emissions and strengthening energy security. However, the current situation shows that decisions regarding energy and climate policy can have unintended side effects on food markets.
If the world faces simultaneous shortages of both energy and food, the question of how to allocate limited agricultural resources will become even more pressing than before. This is a political choice that cannot be evaluated solely in terms of fuel prices or emissions reductions.
El Niño may deepen the strain
The greatest uncertainty is the weather.
A strong El Niño developing in the Pacific Ocean affects precipitation levels and temperatures in very different regions of the world. In some places, it may lead to prolonged drought; in others, to heavier-than-usual rains and flooding. Agriculture in Brazil and Australia is particularly at risk. Brazil’s corn harvest forecast has already been reduced by six million tonnes, to 137 million tonnes. If El Niño intensifies, the harvest could decline by up to another ten million tonnes.
In Australia, the wheat harvest could fall from the currently projected 28 million tonnes to 22 million tonnes if adverse weather conditions persist. This would be a significant change for a country that is one of the world’s leading wheat exporters.
Soybeans, rice, palm oil, sugar, coffee, and cocoa are also at risk. Since grains and soybeans are widely used as animal feed, the price increase will also be passed on to meat, dairy, and egg production.
Particularly problematic is the possibility that weather-related crop losses could strike regions where farmers have already reduced fertiliser use due to high prices. Plants with weaker growth may be more vulnerable to drought and heat.
These are risk scenarios, not crop losses that have already occurred. The impact of El Niño is not uniform across all regions. For example, higher rainfall in Argentina could actually benefit its agriculture, partially offsetting potential losses in Brazil. India, too, has significant rice reserves and an extensive irrigation system, which help mitigate climate risks.
It is precisely these regional differences that are important, as the emergence of a global food crisis would require serious disruptions in several major production regions simultaneously.
Food prices could become a political issue
The International Monetary Fund also drew attention to rising food prices in its October World Economic Outlook. According to the IMF’s forecast, fertiliser prices will rise by approximately 10 percent this year, and food prices will increase by 5 percent in 2026 and by another 2.4 percent in 2027. However, this is a general forecast that may mask very large regional differences.
Price increases will hit poorer countries and those dependent on food imports the hardest. In wealthier countries, higher food prices primarily mean pressure on purchasing power and accelerating inflation. In poorer countries, the question may be whether people can afford enough food.
According to S&P Global, food expenses account for approximately half of household spending in low-income countries. When prices rise, families have few options for reallocating their spending. Often, they first cut back on meat, dairy products, and vegetables and switch to cheaper but less varied foods.
The political impact of a food crisis should not be underestimated. History shows that sharp price increases can heighten social tensions even in places where dissatisfaction with the government is already high. The rise in food prices in 2010–2011 was one of the causes of the Arab Spring uprisings.
In today’s geopolitical climate, similar price pressures could exacerbate instability in several countries in Africa, the Middle East, and Asia, and also increase migratory pressures.
Governments typically seek to intervene in such situations through subsidies, price controls, or export bans. While these measures may alleviate the immediate hardships faced by the population, they place a burden on the national budget and may reduce food availability in other countries. Thus, one country’s attempt to protect its consumers can exacerbate problems elsewhere.
Europe is not standing idly by
For the European Union, the current situation has several dimensions. On the one hand, European agriculture still has significant production capacity, and its consumers are generally better protected than residents of poorer countries.
On the other hand, high fertiliser and energy prices directly affect the competitiveness of European agriculture. Reducing dependence on Russian gas has increased Europe’s exposure to the global liquefied natural gas market, where supply disruptions stemming from the conflict in the Middle East are being acutely felt.
For Europe, however, the issue is not merely a matter of how to support farmers or keep rising food prices under control. It is also in Europe’s broader strategic interest to prevent a deterioration in food security in neighbouring regions, particularly in North Africa and the Middle East.
This means that energy security, agricultural policy, development cooperation, and trade policy should be treated as interconnected issues to a greater extent than before. Diversifying fertiliser supplies, increasing production resilience, and keeping international trade routes open are all part of the same challenge.
At the same time, we must resist the temptation to respond to every crisis with new trade restrictions. If major food producers begin to restrict exports out of fear of potential shortages, this could drive up international food prices even if global total production has not yet declined significantly.
A crisis is not inevitable
The world’s agricultural and trade systems have managed to adapt to serious disruptions in the past. Alternative suppliers are found, higher prices encourage increased production, and good harvests in one region can offset losses in another. Even now, some fertiliser markets have stabilised somewhat following an initial price spike.
However, adaptation takes time in agriculture. A lost planting season cannot be made up for retroactively, nor can a poor harvest be quickly compensated for. Therefore, the full impact of the current disruptions in the energy and fertiliser markets may not be felt until 2027.
Much depends on how long the supply disruptions caused by the wars in the Middle East and Ukraine last, and how next year’s harvests turn out in the world’s major agricultural regions. A resumption of supplies and favourable weather conditions would help ease price pressures. However, if ongoing supply difficulties are compounded by poor harvests in several key production regions, the effects of these factors could reinforce one another, causing a more widespread rise in prices and exacerbating the difficulties faced primarily by poorer, food-import-dependent countries.
A global food crisis is therefore not inevitable, but the conditions necessary for its emergence are taking shape. The longer the disruptions caused by military conflicts persist and the more unfavourable weather conditions become, the greater the risk that isolated difficulties will coalesce into a broader crisis.
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