The escalation between Israel and Iran, combined with the prolonged war between Russia and Ukraine, accelerated in May 2026 a structural shift that is already impacting the global agricultural economy. Governments are redirecting resources from sustainability, agricultural innovation and rural development toward defense spending and crisis management. The consequences are spreading rapidly across fertilizer markets, grain trade, food prices and the long-term stability of global food systems.

A silent wartime economy is reshaping global agriculture

For years, the international agricultural agenda revolved around climate resilience, sustainable farming, green financing and food system transformation. But the growing geopolitical instability in both the Middle East and Eastern Europe is rapidly changing those priorities.

Since late February, the conflict between Israel and Iran evolved from indirect operations and proxy confrontations into a broader regional war with increasing implications for the global economy. One of the main pressure points has been the Strait of Hormuz, a strategic maritime corridor critical for global energy flows and agricultural input supply chains.

The impact on agriculture was immediate. Freight costs increased, energy markets became more volatile and fertilizer prices surged again. Urea, one of the world's most important crop nutrients, climbed to nearly US$725.6 per ton by the end of March 2026, posting a monthly increase above 53%.

Countries heavily dependent on imported fertilizers, particularly Brazil, became especially vulnerable to supply disruptions linked to the Persian Gulf.

But the larger concern extends far beyond fertilizer prices.

The world is entering a new phase where governments increasingly prioritize national security, military infrastructure and strategic defense capacity over long-term agricultural investment. In practical terms, agriculture is beginning to compete directly with defense budgets for public resources.

Defense spending rises while sustainability loses ground

Europe has become one of the clearest examples of this transition.

According to international defense monitoring organizations including SIPRI and NATO, military expenditures across Europe accelerated sharply after 2024. Germany expanded defense spending by roughly 24%, while Spain increased military allocations close to 50%. Countries bordering Russia and Ukraine, including Poland, Estonia and Lithuania, also boosted defense budgets significantly.

For global agriculture, the effect is indirect but potentially profound.

Funds previously allocated to agricultural research, environmental protection, climate adaptation, innovation programs and rural development are increasingly being redirected toward defense priorities, energy security and emergency response systems.

That shift could slow the development of critical agricultural technologies needed to confront future climate challenges. Investments linked to biological products, precision agriculture, crop genetics, water efficiency and low-carbon farming systems may lose momentum as governments focus on immediate geopolitical risks.

At the same time, international organizations continue warning about the humanitarian dimension of the crisis.

The FAO estimates that an escalation of the Middle East conflict could push nearly 45 million additional people into severe food insecurity or famine risk conditions. Rising food inflation, damaged export infrastructure and disruptions in grain supply chains are increasing pressure on already fragile economies.

The prolonged war between Russia and Ukraine continues to weaken one of the world's most strategic grain-exporting regions. Ukrainian grain exports remain below pre-war levels, while shipping risks and insurance costs continue to affect Black Sea logistics.

Together, both conflicts are redefining the meaning of global food security. The issue is no longer limited to food production alone. The new challenge involves ensuring stable access, affordable logistics, financing capacity and geopolitical stability across interconnected agricultural markets.

Latin America faces opportunity and risk at the same time

For Latin America, the new geopolitical environment creates a complex and contradictory scenario.

On one side, higher global commodity prices may generate temporary gains for exporters of soybeans, corn, wheat and animal protein. Countries like Argentina, Brazil and Uruguay could benefit from stronger agricultural export revenues if supply disruptions continue.

However, those gains may quickly be offset by rising input costs, financial volatility and tighter international credit conditions.

Argentina illustrates this contradiction clearly. The country could capitalize on elevated grain and livestock prices, yet still struggle with structural weaknesses including macroeconomic instability, high logistics costs, tax pressure and limited access to financing.

Brazil, despite its export scale, remains deeply dependent on imported fertilizers, making it highly exposed to disruptions in global supply chains.

Across Latin America, the agricultural sector now faces a new reality: geopolitics has become just as important as weather patterns or commodity demand.

Conflicts taking place thousands of miles away are directly influencing the cost structure of farms in South America, the availability of fertilizers, shipping expenses and even the financial sustainability of agribusiness operations.

The global agricultural industry is entering a period where wars no longer affect only diplomacy and energy markets. They increasingly shape the future of food production, agricultural investment, trade competitiveness and the long-term balance of global food systems.

This article was written following guidelines from Daniel Werner, former Director of the Department of Foreign Affairs of Israel and now a private consultant.