Fertilizer Shortage and El Niño Collide: Global Food Costs May Soar

A warning from JPMorgan suggests that global food costs could increase by five percent in the first half of 2027 due to two converging threats. The first threat is a shortage of fertilizer, particularly urea, which is manufactured using natural gas and is critical for producing corn, wheat, and rice. The Iran conflict has disrupted the supply chain, slowing production and restricting exports through the Strait of Hormuz.

The second threat is El Niño, a climate phenomenon that can alter weather patterns globally. JPMorgan's analysis suggests that the combination of fertilizer shortages and El Niño could lead to crop losses in major producing countries such as Brazil, India, and the US.

Dr. Sarah Kapnick, Global Head of Climate Advisory for JPMorgan, described the overlapping threats as an example of 'climate acting as a threat multiplier.' She warned that even if the supply disruption is resolved quickly, it could take up to four years for fertilizer production to return to full capacity.