Even if the current conflict in the Middle East were to cease immediately, the resulting inflation in key agricultural inputs will inevitably cause a severe food shock over the next several months. Experts warn there is no quick fix, though accelerating the net-zero transition offers protection against future conflict-driven crises.

The Perfect Storm Driving Food Price Hikes

Concerns are mounting that soaring costs for fuel, fertilizers, and pesticides, driven by instability in Iran, could usher in the worst food shock on record. Faced with these escalating expenses, many farmers are expected to reduce planting in the near future, creating supply shortfalls and driving up consumer food prices later this year.

“We are in a bit of a perfect storm, and there isn’t any easy way out of this,” notes an expert from the University of Leeds, UK. They added that recovery, similar to post-COVID reconstruction, will take time even if the situation stabilizes tomorrow.

Historical Context and Current Pressures

While global food prices had declined in real terms since their 1970s peak, they have been trending upward since the 2000s. Climate change is already a significant contributing factor to volatility.

Currently, attacks by the US and Israel on Iran are causing major disruptions to the raw materials essential for food production and distribution. Fuel is the most immediate concern, as diesel powers farm machinery and the logistics network that moves food globally.

Fertilizer Supply Faces Critical Disruption

Mineral fertilizers are vital; one expert stated that completely halting their worldwide use would likely lead to half the global population starving.

Nitrogen fertilizers rely heavily on natural gas for production. Qatar, a major producer, supplies 15 percent of the world's urea and 50 percent of that sold internationally. However, much of this supply is currently blocked from passing through the Strait of Hormuz.

Impact on Global Production

Nations like India, Bangladesh, and Pakistan, which produce their own fertilizers using Persian Gulf gas, are also suffering. Damage to natural gas facilities in the Gulf region due to the conflict could prolong fertilizer shortages for years.

Furthermore, a significant fertilizer plant in Australia has also faced issues. Consequently, nitrogen fertilizer prices have already risen by over a third. Professor Qaim estimates that a doubling of fertilizer costs could easily translate to a 20 to 30 percent increase in overall food prices.

Sulphur fertilizers and sulphuric acid, necessary for processing mined phosphate, are also seeing supply constraints from key Gulf producers like Qatar and the UAE.

Pesticides and Naphtha Links

Pesticide costs are tied to naphtha, a fossil fuel derivative used in many chemicals and food packaging plastics. Analyst at Argus Media in the UK reported that three global naphtha-exporting hubs were struck by drones in March, including ports in Russia, Qatar, and the UAE.

Farmer Decisions and Market Speculation

These combined factors will push up prices for food and numerous other goods in the coming months. “The number of markets that are being affected by this is staggering,” noted an expert.

Beyond increased input costs, uncertainty over profitability may lead farmers to plant different crops or reduce overall acreage. Professor Qaim also warned that speculation and profiteering could further inflate prices.

Risk of a Worse Crisis

The severe food price spike of the 1970s was partly due to depleted global reserves. While reserves are currently adequate, this could change if the conflict persists, especially if extreme weather linked to global warming further damages yields.

“There’s a lot of potential for this to spin out of control and lead to a just as severe, if not a worse, crisis,” stated Clapp. The most vulnerable populations are those with lower incomes, as they spend a larger portion of their budget on food.

Compounding the issue, international aid is already being cut while simultaneously being more needed. Benton at the University of Oxford noted that past food price spikes have historically correlated with increased instability.

Mitigating the Damage: Biofuels and Resilience

One immediate measure to limit the damage involves reducing the use of food for biofuels. Behrens pointed out that Europe burns the equivalent of about 15 million loaves of bread daily for biofuels, calling it a “crazy way to produce energy.”

Governments could cut biofuel production, thereby releasing more food onto the market. Professor Qaim suggested an international agreement to automatically limit biofuel production when food prices surge, though he noted this has not happened in past crises.

Disproportionate Impact of Biofuel Policy

Increasing biofuel production from food disproportionately harms food markets without significantly impacting fuel prices. For example, in the US, corn converted to bioethanol supplies only a small fraction of gasoline needs, according to Hill.

Professor at the University of British Columbia argued that ethanol blending is outdated policy that fails to address climate change. He suggested the oil price spike should prompt a shift toward electric vehicles instead of backward policy moves.

Building a Resilient Future

This major system shock emphasizes the need for greater resilience. Hill believes that accelerating the shift to renewable energy, EVs, and heat pumps will make economies less susceptible to oil price volatility.

Ryan emphasized decoupling the chemical industry from fossil fuels, such as producing nitrogen fertilizers using renewable electricity instead of natural gas. While the technology exists for zero-greenhouse-gas ammonia, sufficient renewable electricity capacity is lacking, especially with rising demand from AI data centers.

Sustainable Farming Solutions

In the short term, reducing fertilizer overuse is crucial, as excess amounts pollute waterways or convert into nitrous oxide, a potent greenhouse gas.

Solutions include precision farming, crop rotation with legumes, better manure management, and breeding more efficient plants. Professor Qaim stressed that this push is toward sustainable farming systems, which is distinct from organic farming, as going fully organic would cause massive price increases and deforestation due to lower yields.

Behrens advocates for a broader food system transformation, including dietary changes, such as sourcing protein from legumes rather than grain-fed meat, which “makes such a big difference.”