Global food prices could rise further in 2027 amid increasing fertiliser and farming costs, coupled with potential El Niño-related weather disruptions, with the full impact likely to emerge gradually over the coming months, according to a report by S&P Global.
The report warned that an exceptionally strong El Niño could threaten agricultural production across major crop-producing regions, while shortages of fertiliser and diesel continue to put pressure on farmers.
Unlike fluctuations in oil prices, which are reflected relatively quickly in markets, disruptions to agricultural production take longer to affect consumers because farmers purchase seeds, fertilisers and fuel months before harvesting and selling their crops.
The report indicated that the financial pressure currently facing farmers may not translate into significant food price increases until 2027.
𝗙𝗮𝗿𝗺𝗶𝗻𝗴 𝗰𝗼𝘀𝘁𝘀 𝘂𝗻𝗱𝗲𝗿 𝗽𝗿𝗲𝘀𝘀𝘂𝗿𝗲
According to S&P Global, agriculture is facing multiple challenges, including rising fertiliser and energy costs, increasing demand for biofuels and the possibility of severe weather disruptions associated with El Niño.
Fertiliser production depends heavily on natural gas, while diesel is essential for operating agricultural machinery, irrigation systems and transporting farm produce.
Higher energy prices are consequently increasing production costs and reducing farmers' profit margins, potentially affecting decisions on crop cultivation and investment.
The report also highlighted the impact of conflicts in Europe and the Middle East on agricultural markets. Rising diesel prices have made biofuels more attractive, encouraging the diversion of certain crops from food production towards fuel manufacturing.
In some regions, this could make crops used for biofuel production more commercially attractive than those grown for food consumption.
𝗘𝗹 𝗡𝗶ñ𝗼 𝘁𝗵𝗿𝗲𝗮𝘁𝗲𝗻𝘀 𝗵𝗮𝗿𝘃𝗲𝘀𝘁𝘀
The report warned that an exceptionally strong El Niño, expected to peak towards the end of 2026, could intensify existing agricultural challenges by triggering droughts and floods across important food-producing regions in Asia, Africa and Latin America.
Such disruptions could reduce crop yields and further strain agricultural supply chains already affected by higher production costs.
The consequences could be particularly severe in regions where agricultural productivity has already suffered because of inadequate fertiliser use over successive growing seasons.
S&P Global also warned that global grain reserves remain under pressure amid the continuing Ukraine conflict, limiting the capacity of markets to absorb simultaneous crop failures across multiple regions.
The combined impact of weather-related disruptions, energy costs and geopolitical tensions could therefore create additional pressure on food availability and affordability.
𝗙𝗼𝗼𝗱 𝗽𝗿𝗶𝗰𝗲𝘀 𝗺𝗮𝘆 𝗿𝗶𝘀𝗲 𝗶𝗻 𝟮𝟬𝟮𝟳
The report noted that fertiliser production is expected to recover gradually, potentially helping agricultural markets stabilise over time.
Higher crop prices could eventually improve farmers' profit margins, encourage additional land to be brought under cultivation and support greater fertiliser use.
However, these adjustments would take time, meaning consumers could face higher food prices before agricultural production and supply conditions improve.
The report also cautioned that the impact of El Niño would extend beyond staple food grains to cash crops that support livelihoods in many developing economies.
S&P Global stressed that a global food crisis was not inevitable, but warned that the convergence of geopolitical disruptions, rising agricultural costs and extreme weather had made the risk increasingly significant.