How the energy crisis could become a food security crisis

The Iran war and the Ukraine-Russia conflict are creating a "multidirectional squeeze on world agriculture" that could spiral into a crisis, a new report finds. Why it matters: Wars and extreme weather are colliding to threaten global food supplies and drive up prices, especially in vulnerable economies. The report explores how the El Niño phenomenon could compound the problems of restricted supplies of key fertilizer ingredients, higher fuel costs on the farm and more. The S&P Global Institute report is an unusually holistic look at the topic. Driving the news: The analysis comes alongside new warnings about food from the International Monetary Fund. Its World Economic Outlook last week sees an overall 10% increase in fertilizer prices this year and food costs rising by 5% in 2026 and 2.4% in 2027, though it depends on the region. "Higher energy and food prices could have severe effects on poverty and food security" and threaten political stability in vulnerable economies, the IMF warned. State of play: Food producers need steady supplies of natural gas and sulfur for fertilizer, diesel for farm machinery and food transport, and open sea lanes for trade, S&P notes. "Conflict is now testing all of them at once, just as El Niño tests the harvest," states the report from the research and consulting firm. "The risk is increasing, especially for low-income countries, where food costs amount to about half of household spending," it states. Zoom out: The disruptions could affect agricultural production worldwide, from soybeans and corn in Brazil to wheat in Australia, S&P finds. The intrigue: The S&P report also warns of something that has received somewhat less attention. The diesel supply crunch doesn't just raise costs for farmers. It also works alongside pro-biofuels policies to make biodiesel production more attractive. "The knock-on effect is that, in some regions, crops for fuel become more valuable than crops for food." Zoom in: A few stats via S&P illustrate the overlapping threats. Middle Eastern prices for exported sulfur, a fertilizer ingredient, reached a record $1,000 per metric ton in July, after starting the year at a historically high $500 per metric ton. 47% of the global sulfur trade normally goes through the Strait of Hormuz. In Indonesia, industrial use of palm oil, largely for biodiesel, is expected to be roughly five times its 2015-16 level. The bottom line: A global food crisis is by no means certain. But if wars keep disrupting energy and fertilizer supplies, and weather cuts harvests in key regions, "the elements of such a crisis will be falling into place," S&P warns.

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