Food inflation is the latest front in the war involving the United States, Israel, and Iran.
Today’s wars no longer stay on the battlefield. Instead, their effects ripple through shipping routes, cities, businesses and, ultimately, supermarkets.
This conflict shows how quickly a geopolitical crisis can become a commercial problem. As a result, markets worldwide now feel the strain.
Why the Strait of Hormuz matters
The Middle East is central to the energy market, both oil and natural gas. It also anchors the transit of raw materials.
Natural gas, in turn, is the main input for urea and other fertilizers.
So when major powers go to war, gas prices jump. Meanwhile, key shipping lanes such as the Strait of Hormuz face indefinite blockades.
Sharply reduced traffic through this strategic waterway has already upended the oil market. The problem is that oil doesn’t travel alone.
When energy costs rise, prices increase across nearly the entire supply chain. That includes making fertilizers, growing crops, and processing food.
It also covers refrigerating, insuring, and transporting that food.
“The problem is that oil doesn’t travel alone.”
— Ricardo Gaitán, brand analyst
How Fertilizer Costs Drive Food Inflation
The result is a domino effect. As fertilizers grow more expensive, the cost of planting and tending crops soars.
Farmers, in turn, must raise the price of their harvests.
Next, processors and packers buy that pricier raw material. Consequently, their operating costs rise.
Supermarkets operate on narrow profit margins. Therefore, they pass the increase on to shoppers.
Consumers then lose purchasing power to food inflation. In effect, they pay the bill for a war on the other side of the world.
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The Domino Effect, Step by Step
- War disrupts natural gas and oil flows.
- Fertilizer prices climb.
- Farmers raise harvest prices.
- Processors and packers pay more for raw materials.
- Supermarkets pass the increase on to shoppers.
Latin America’s fertilizer exposure
On average, Latin America relies on imports for 78% of its fertilizer needs. Brazil, Ecuador, Mexico and Colombia stand out as especially vulnerable.
Thus, the biggest risk goes beyond rising oil prices. The real danger is that the energy crisis turns into food inflation.
The U.N. Food and Agriculture Organization has already sounded the alarm. Higher fertilizer costs, it warned, could cut crop yields and strain global supplies through 2027.
“The real danger is that the energy crisis turns into food inflation.”
Food Inflation by the Numbers
- 78%: Latin America’s average reliance on imported fertilizers.
- $60 billion: Total goods covered by the U.S.-China “30-for-30” pact.
- Jan. 10, 2027: End date of the current U.S.-China trade truce.
- 2027: Year through which the FAO sees strain on yields and supplies.
Tariffs Cloud the Outlook
Washington’s trade policy adds another source of pressure. Its use of tariffs as an economic tool forces companies to rethink costs, suppliers and markets.
Even after the U.S.-China trade agreements in late September, agriculture and other sensitive sectors still face uncertainty.
U.S. President Donald Trump and Chinese President Xi Jinping sealed the pact known as “30-for-30.”
It calls for reciprocal tariff cuts on $60 billion in “non-sensitive” goods. That total is split evenly between the two sides.
U.S. exports to China will center on farm products: poultry, pork, dairy, corn and wheat.
Chinese exports to the U.S., by contrast, will stick to mass-market consumer goods. These include small appliances, baby products, kitchenware, and sports equipment.
A Truce, Not the End of the War
The trade truce runs until Jan. 10, 2027, and it has sparked optimism.
Still, analysts see the deal as a logistical reprieve and a diplomatic gesture. In their view, it does not end a war that has already reached supermarket shelves.