Global Food Prices Set to Soar as Conflicts and El Nino Bite

The world is on the verge of another bout of food inflation due to wars in Iran and Ukraine, along with the El Nino weather phenomenon. The chief economist of the United Nations Food and Agriculture Organization warned that higher crude oil prices, loss of fertilizer from the Gulf region, and extreme weather are feeding through to costs.

Maximo Torero said that commodity prices will start to increase more now and food prices will start increasing by the end of the year, and next year for sure they will increase more. The transmission from commodity to final food price is around three to six months.

The Strait of Hormuz problem affects all inputs of agricultural commodities, including Brent oil and natural gas used for fertilizers. Damage inflicted by Ukraine on Russia's oil and gas infrastructure curtails the export market for diesel and natural gas, key inputs in food production.