The United Nations Food and Agriculture Organization (FAO) is warning that the world could face another wave of food inflation before the end of 2026. Speaking to Reuters, FAO Chief Economist Máximo Torero said that the combination of the conflicts involving Iran and Ukraine, a strengthening El Niño, higher oil prices and tightening supplies of key agricultural inputs is creating conditions for rising production costs that will likely translate into higher food prices over the coming months. The warning comes as farmers worldwide face increasingly tighter margins heading into the next planting season.

Production Costs Are Rising Across Global Agriculture

According to FAO, much of the recent increase in production costs has not yet reached consumers, but that situation is expected to change. Higher crude oil prices increase the cost of pumping, transportation, processing and packaging, while rising natural gas prices directly affect fertilizer production. In addition, diesel shortages in some regions and supply disruptions linked to geopolitical tensions continue to pressure agricultural production costs worldwide.

Bioinputs

Seaweed Biostimulants Are Emerging as a Cornerstone of Regenerative Agriculture

Torero noted that commodity price increases typically take three to six months to filter through the food supply chain, suggesting that consumers could begin seeing stronger food inflation by the end of this year, with additional increases likely throughout 2027. While recent harvests have helped stabilize grain markets, those favorable conditions may not continue if weather and geopolitical risks intensify.

El Niño Adds Another Layer of Risk

FAO also expressed concern about the expected strength of this year's El Niño, which is likely to alter rainfall patterns across several major agricultural regions. India is already experiencing a delayed monsoon and below-average rainfall, raising concerns about rice production and global grain supplies.

Elsewhere, Australia recently projected a 21% decline in winter crop production, citing higher fuel and fertilizer costs as well as uncertainty regarding key agricultural inputs. In the United States, some corn and wheat growers have already shifted acreage toward soybeans because they require lower fertilizer applications, illustrating how production decisions are increasingly being influenced by input economics.

Higher Commodity Prices Could Bring Both Opportunities and Risks

For agricultural exporters, firmer commodity prices could improve farm revenues. However, higher input costs may offset much of those gains, leaving producers with compressed profit margins. FAO notes that tighter farm economics are already influencing planting decisions across North America, Europe, Brazil and Asia, increasing the likelihood of reduced crop acreage in some regions.

The organization believes that the combination of geopolitical conflicts, extreme weather and rising production costs represents one of the most significant threats to global food security since the inflation surge of 2022. Should these pressures continue, consumers could face higher grocery bills while producers confront another season of difficult economic decisions in an increasingly volatile agricultural marketplace.