Al-Faw: Food price shock has not yet fully reached consumers - Sarmad
• Wheat production fell 4.3% this year compared to 2025
• Farmers face tough decisions as input costs rise faster than commodity prices
(Bloomberg) – Maximiliano Torero, chief economist at the UN Food and Agriculture Organization (FAO), warned that the current rise in food prices driven by the Iran war and the ongoing Russia-Ukraine conflict may not yet have fully reached consumers, expecting continued upward pressure through the end of the year unless diplomatic settlements ease geopolitical disruptions, according to Bloomberg Middle East.
Torero explained that it takes between three and six months for increased grain and energy transport costs to translate into higher prices for bread, pasta, and other final products. However, he added that supply chains would need time to return to normal even if tensions subside.
“Consumers have not yet felt the full impact” of rising commodity prices, Torero said, noting that the shock is gradually transmitting from energy, fertilizer, and transport costs to farmers, then to crop prices, and finally to products reaching store shelves.
As the global economy continues to absorb the impact of the Iran war on oil and gas prices, Torero’s warning signals a new price shock, particularly for food- and energy-importing countries.
The comments come as global food prices are beginning to reflect some of these pressures. The FAO Food Price Index rose 0.6% in July compared to the previous month, while the grain price index jumped 3.4%. Global wheat prices increased by 5.8% amid concerns over disruptions to Black Sea export flows and the impact of heatwaves on crops in major producing countries. Nevertheless, the overall food price index remained about 18% below its peak recorded in March 2022.
A cost crisis, not a shortage crisis
The current situation differs from the shock that followed Russia’s invasion of Ukraine in 2022. Global grain supplies remain relatively abundant, but the cost of producing and transporting them is rising.
The FAO expects global grain production to reach approximately 2.98 billion tons in 2026, a 1.9% decline from the record level set last year, but it will still be the second-largest harvest in history. It also expects the global stock-to-use ratio to remain at a relatively comfortable 32% next year.
The outlook is less reassuring for wheat. The organization lowered its global production forecast to 806.5 million tons this year, a 4.3% drop from 2025, as yields declined in several major producing countries. It also expects global wheat trade to fall by about 4.7% during the 2026–2027 season.
Torero said the direct threat posed by the war in Ukraine has become as much logistical as it is productive, given the Black Sea’s importance to global grain trade and the risks surrounding the transport of exports to markets.
He added that risks appear lower for corn at present, despite weather and summer crop concerns, while wheat and rice remain commodities requiring close monitoring in the coming months.
Hormuz reaches the farm
The war in the Middle East adds another layer of risk, which does not necessarily stem from a shortage of food itself, but rather from energy, fertilizers, and transport.
The Strait of Hormuz is not just a passage for oil and gas; disruptions to energy flows through it raise the cost of operating agricultural machinery, irrigation, and transport, as well as the production of nitrogen fertilizers, which rely heavily on natural gas for manufacturing.
Before the current conflict, approximately 20% of global oil supplies and more than 20% of worldwide liquefied natural gas (LNG) trade passed through the Strait of Hormuz, according to the U.S. Energy Information Administration.
Earlier this year, the Food and Agriculture Organization (FAO) stated that the crisis was beginning to shift from energy to agriculture in stages, starting with rising fuel and fertilizer prices, then affecting farmers’ decisions, input usage, and yields, before eventually impacting consumer goods and food prices.
Data already show pressure on the fertilizer market. Global fertilizer trade volume fell by about 30% between January and April compared to the same period last year, according to the FAO’s June “Food Outlook” report.
Farmers face tougher choices
Torero said this cycle represents one of the biggest risks to supplies in the coming phase, as input prices are rising at a pace that squeezes farmers’ margins more than the rise in crop prices themselves.
This could lead some farmers to reduce fertilizer use or switch to crops requiring less nitrogen, which in turn could result in lower yields in subsequent seasons.
This is what makes the current crisis different from a mere temporary spike in wheat or corn prices.
Oil reacts quickly to geopolitical events, with its movements appearing almost immediately in markets, whereas the food supply chain moves more slowly. Wheat requires transportation, milling, processing, and distribution before it becomes a loaf of bread, with each stage incurring energy, labor, and transport costs.
Therefore, Torero believes the question facing food markets today is not whether the world has enough food, but whether it can produce and deliver it to consumers at an affordable cost.
This assessment aligns with the FAO’s broader evaluation of markets. In June, the organization said global supplies remain “strong at the production level,” but risks surrounding energy, fertilizers, weather, and trade are increasing and could quickly translate into challenges in food access and prices.
The coming months will determine the extent to which these pressures evolve from a crisis of farmer and shipping company costs into a crisis of household budgets.
