New risks related to food security are increasing in the world. Possible shortages in fertilizer supply, persistently high energy prices, and a strong El Niño weather event could cause serious problems in the global food market next year.
Modern.az reports that JPMorgan analysts have warned of accelerating food inflation and food supply remaining under pressure in some regions in 2027.
According to the bank's analysis, problems in the supply of nitrogen-based fertilizers, in particular, could directly affect agricultural production. One of the main reasons for this is that fertilizer production is closely linked to energy, especially natural gas.
JPMorgan states that a significant portion of the urea used worldwide is imported from the Persian Gulf region. The conflict around Iran and the disruption of transport routes in the region create additional risks for the production and transportation of fertilizers.
Further complicating the matter is the El Niño weather phenomenon. According to JPMorgan's calculations, there is an 81 percent probability that the current El Niño event will reach a "very strong" or "super El Niño" level by the end of the year. The probability of the conditions continuing next year is estimated at 97 percent.
Fertilizer is one of the main factors of productivity in agriculture. In particular, the timely application of nitrogen fertilizers to the soil significantly affects the volume of the crop.
JPMorgan notes that the impact of a disruption in nitrogen fertilizer production may not be immediately apparent, but rather more visible after the planting season. If farmers use less fertilizer due to its increased cost, productivity may decrease, and as a result, the volume of food brought to market may decrease.
This could put additional pressure on the prices of grains, rice, corn, and other major agricultural products.
According to JPMorgan's calculations, the simultaneous persistence of a strong El Niño and high energy prices could add 1.3-1.5 percentage points of additional pressure to global food inflation. The bank forecasts that global food inflation could rise to approximately 5 percent on an annualized basis in the first half of 2027.
According to analysts, developing countries, where food has a larger share in the consumer basket, are more sensitive to risks.
India, Indonesia, Brazil, and Colombia, in particular, stand out in terms of both fertilizer and weather-related risks.
However, JPMorgan does not state that the situation will automatically turn into a global food shortage. The bank notes that global grain reserves are currently in a more favorable position compared to previous major crisis periods, and rice reserves in Asia are also relatively high.
That is, the main danger is the simultaneous occurrence of fertilizer shortages, an energy crisis, and extreme weather conditions. If this scenario materializes, the impact may not be limited to agriculture, but could extend from food prices to global inflation.
