Global Food Prices Reach Three-Year High Amid Ongoing Conflict and Energy Crisis
The United Nations Food and Agriculture Organization (FAO) announced on Friday that global food prices have reached their highest level in over three years in April. This surge is a direct consequence of the ongoing conflict with Iran and the effective closure of the Strait of Hormuz, leading to a sharp increase in energy prices.
According to the FAO statement, the FAO Food Price Index, which tracks international prices of a basket of basic commodities, stood at 130.7 points in April, a 1.6% increase from its revised March level.
Energy Drives Food Price Hike
The global index incorporates several sub-indices. The cereal index rose by 0.8% over the month, with a similar increase recorded for wheat.
The FAO forecasts a decline in wheat cultivation areas for 2026. Farmers are turning to crops that require less fertilizer, as prices skyrocket due to the blockade of the Strait of Hormuz. This strategic passage accounts for nearly a third of the world's fertilizer supply, which is heavily dependent on energy costs.
As a result, the FAO has revised its global wheat production forecast downward to 817 million tonnes, a 2% decline from the previous year, citing "uncertainty" over navigation in the strait.
Rice and Vegetable Oils Under Pressure
Rice is not immune to the price hike; its index rose by 1.9% in April, driven by increased production and marketing costs linked to energy in most exporting countries.
Maximo Torero, the FAO's chief economist, noted that the surge in vegetable oils has significantly contributed to the food price inflation. The vegetable oil index jumped by 5.9% since March, reaching its highest level since July 2022. Palm oil, in particular, is increasingly sought after by the biofuel sector as oil prices soar.
Resilience Amid Crisis
Despite these wartime turbulences, Maximo Torero observes that agro-food systems are showing resilience. The cereal price increase remains moderate due to sufficient stocks from previous seasons.
In a separate report, the FAO has even slightly raised its estimates of global cereal production for 2025 to a record 3.040 billion tonnes, a 6% increase from the previous year. Finally, while human consumption of wheat has been revised downward (notably in Iran, Turkey, and Mexico), the increased use of wheat for animal feed compensates for this decline.
