FAO Warns of Global Food Price Surge Ahead

The United Nations Food and Agriculture Organization (FAO) is warning that global food prices are likely to surge again by year-end, driven by a perfect storm of factors including wars in Iran and Ukraine and the El Nino weather phenomenon.

According to Maximo Torero, chief economist at the FAO, higher crude oil prices, fertiliser shortages, diesel scarcity, and extreme weather will contribute to rising costs that will eventually be passed on to consumers.

Torero noted that commodity prices tend to increase with a three- to six-month delay before affecting final food prices. He also pointed out that the Strait of Hormuz is a significant issue for agricultural commodities, as it affects Brent oil and natural gas used for fertilisers and diesel.

Even in countries like the US, which is self-sufficient for most key inputs, farmers are facing tight margins due to high production costs. The American Farm Bureau Federation estimates that farmers growing nine principal crops may lose $32 billion in 2027 if they don't receive federal assistance.