What’s behind the looming global food crisis

Saad (0:01)

Hello folks, you're tuned in to Finshots Daily. I'm Saad. If you're new here, welcome. If you're returning, welcome back. In today's episode, we explain why global food security concerns are returning to the table, despite good harvests in some parts of the world.

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You've probably noticed that grocery bills have a way of creeping up, even when there doesn't seem to be an obvious shortage of food.

Sugar, wheat, and rice prices have recently gone up. And what's interesting is that this is happening even when there are regions in the world producing plenty of food. That's because what we pay for groceries depends on much more than what farmers harvest. The reason we're telling you this is that food security concerns have returned to the center of international discussions.

And the problem is slightly different from a typical agricultural shortage. The primary challenge seems to be that the systems required to produce transport and finance food supplies are running into trouble. For context, when External Affairs Minister S. Shankar addressed the United Nations General Assembly recently, he summarized this dilemma for the Global South as a 4F crisis involving food, fuel, fertilizer and finance. He linked it to an intensifying El Nino fertilizer shortage and persistent transport disruptions along major trade corridors. And you can already see some of these pressures showing up in global food prices. The FAO, Food and Agricultural Organization, tracks this using an index called the FAO Food Price Index. It is essentially a global thermometer for food prices, which tracks the international prices of a basket of major food items, including cereals and sugar, to meat, dairy and vegetable oils. The index rose to 136 points in September 2026, up 1.5% from August and 5.8% from a year earlier. Food prices saw a sharper increase. Cereal prices, for instance, jumped 5.1% during the month and 17.2% over the past year, with international wheat prices reaching their highest level since August 2023 Sugar prices also rose, climbing 6.1% in September and 14.7% over the past year. But if you look at the harvest data, it's a completely different story. The FAO projects the total global serial production for 2026 to reach 2.9 billion tonnes, only 2.1% below the previous year's record harvest. So, if so much grain is being produced, why are food prices rising? And why are governments worried about another food crisis?

To begin with, transport bottlenecks continue to disrupt supply in grain markets. Ukraine is a major exporter of wheat and maize, and the Black Sea is a key route for shipping these grains around the world. So, disruptions in the region have been one of the main reasons global wheat prices rose 6.3% in September. But unlike grain production, which occurs across dozens of agricultural economies, fertilizer manufacturing is heavily concentrated among a small group of producers, including Russia, China, Morocco, and countries within the Persian Gulf. When Hormuz was disrupted in 2026, fertilizer trade slowed, and roughly one-third of the global sea-borne fertilizer trade was put at risk. Nitrogen fertilizers such as urea and ammonia require natural gas as both a chemical feedstock and an energy source. Gas price or supply shocks can therefore result in nitrogen fertilizer costs going up. The economic impact of this, though, does not show up immediately in food markets, because farming runs on a rigid biological timeline.

Farmers have narrow windows to plant crops and apply fertilizers. If fertilizers become too expensive or fail to arrive during a window, they may use less of it or skip it altogether. That can affect the crop months later, when lower yields reduce food supply and push prices higher. So, a fertilizer disruption in 2026 could end up hurting agricultural output well into 2027 But there's another problem. When countries themselves start worrying about fertilizer supplies, they naturally try to keep whatever they can for their own farmers. China and Russia, for instance, have used export quotas, duties and licensing requirements to restrict fertilizer exports. And that creates a bit of a vicious cycle. The supply was already under pressure because of disruptions. Now, some of the fertilizer that could have reached global markets is being kept at home. The WTO, the World Trade Organization, estimates that restrictions introduced after the Persian Gulf disruptions affected up to 15% of global fertilizer exports, rising to 23% if regional Gulf exports are treated as fully restricted. For countries that depend heavily on imports, that means there is simply less fertilizer available to buy. And when that happens, prices go up. This is where the problem gets even bigger for developing countries. Because even if fertilizer is available somewhere in the world, they still need money to buy it. But most important international trade in food-fuel fertilizer is priced in US dollars. And during periods of geopolitical stress, money tends to move towards safer assets, which can weaken developing countries' currencies. That makes dollar-priced imports more expensive, even if the global price of the commodity itself hasn't changed. Richer countries can absorb some of this shock because they have larger foreign exchange reserves. Poor economies, on the other hand, don't have that luxury. They may have to choose between spending more on import subsidies and running down their foreign reserves, cutting other public spending, or simply allowing food prices to rise. And just when you think that the problem couldn't get more complicated, another variable enters and changes the equation. Climate change. The NOAA, the National Oceanic and Atmospheric Administration's September Outlook, puts the chances of a very strong El Nino during the 2026-27 winter at more than 90%.