The world is on the verge of another bout of food inflation as wars in Iran and Ukraine, along with El Nino, create a perfect storm of higher costs and lower crop yields, according to the chief economist of the United Nations Food and Agriculture Organization.

Causes of the Price Surge

The loss of fertilizer from the Gulf region, the shortage of diesel in some parts of the world, and extreme weather are feeding through to costs and will show up in consumer prices. Higher crude oil prices are also expected to contribute to the price surge.

Maximo Torero, the chief economist of the United Nations Food and Agriculture Organization, expects 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 damage inflicted by Ukraine on Russia’s oil and gas infrastructure curtails the export market for diesel and natural gas, both of which are key inputs in food production. This inflicts pain across the world, even if richer countries have more cash to buffer producers.

Impact on Farmers

Even in the U.S., which is self-sufficient for most key inputs, without federal assistance farmers growing nine principal crops may lose $32 billion in 2027, according to the American Farm Bureau Federation, an industry lobby group.

Global wheat and corn planting was already cut in the first three months of the Iran war, and some U.S. producers have shifted to soybeans because they require lower fertilizer inputs. Australia, one of the world’s top crop exporters, recently said that winter crop production is seen down by 21% in part because of a significant increase in both fuel and fertilizer prices and uncertainty over the availability of key inputs.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.