Rising Fuel, Fertilizer Costs Hike Global Food, Beverage Prices

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Written by Paul Wiseman for IIR News Intelligence (Sugar Land, Texas)

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Summary

War-impacted shortages of fuels and fertilizers are key, but widespread droughts are also pushing up world food prices. According to Industrial Info Resources data, more than 15,000 food and beverage projects worldwide total almost $3 billion of investment.

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Agriculture Inflation Recipe: Start with Energy and Fertilizer Shortages

There's a worldwide domino effect looming from the blockade of the Strait of Hormuz--whoever is blocking it. Fuel costs have risen 30% to 38%, and costs for many fertilizers and their components have risen since the Iran war began. For more background on fertilizer blockades, read Industrial Info Resources' April 8, 2026, article - Fertilizers and Components are Also Blocked Behind Strait of Hormuz.

Industrial Info Resources is tracking more than 15,000 projects in the global Food & Beverage Industry worldwide, totaling almost $3 billion of investment.

Markets saw some relief Friday, when Iran declared the Strait of Hormuz "completely open" and U.S. President Donald Trump said he expected negotiations over a peace deal with Iran would "go very quickly." But earlier in the week, Mark Lashier, the chief executive officer of Phillips 66, told attendees at the Semafor World Economy Summit that the global reshuffling caused by the conflict could take months to sort out, given the abrupt logistical changes in the oil supply and the heavy costs involved in rebuilding damaged infrastructure in the Middle East.

Fuel and fertilizer cost increases already have affected cost of producing farm products. The United Nations' Food and Agriculture Organization (FAO) most recent price report, released April 3, lists the following worldwide increases in March over February:

• The FAO Vegetable Oil Price Index increased 5.1% from February, making it 13.2% higher than one year earlier (2025)
• FAO Meat Price Index was up 1% February to March
• FAO Dairy Price Index was up 1.2% February to March
• FAO Sugar Price Index increased 7.2 % February to March

On this situation, FAO's Chief Economist Máximo Torero said: "Price rises since the conflict began have been modest, driven mainly by higher oil prices and cushioned by ample global cereal supplies. But if the conflict stretches beyond 40 days with high input costs with current low margins, farmers will have to choose: Farm the same with fewer inputs, plant less, or switch to less fertilizer-intensive crops. Those choices will hit future yields and shape our food supply and commodity prices for the rest of this year and all of the next."

Add a Helping of Tariffs and Immigration

Already in late 2025, the U.S. Farm Bureau was warning that 2026 U.S. planting could be negatively affected by tariffs and tighter immigration policies. They likely would raise the cost of both farm equipment and labor, possibly making costs higher than the expected income from crop sales for many farmers--a fact that could cause some to just avoid planting.

Elsewhere, this is indeed on the agenda. Ukraine's farmers, already stressed by the Russian invasion of their country, have seen prices of diesel for tractors more than double since February.

Even in the war with Russia, Ukraine's rich soil continued to supply products like grains, oilseeds and vegetable oils to up to 150 countries, according to data from its economic ministry.

But skyrocketing fuel prices are squeezing budgets, in which farmers debate stockpiling fuel now, or waiting until harvest and hoping the war will be over and prices will be lower by then. If the war is not over, shortages could be even greater and prices even higher.

England and France are seeing prices for diesel double, with prices for fertilizer 40% higher. In France, many farmers are switching away from crops like maize that demand more fuel fertilizer, switching instead to crops like sunflowers.

By the Numbers

• 30% to 38%: Rise in fuel prices since start of Iran war
• +7.2%: Rise in sugar prices since start of Iran war
• 87 million: Number of people World Bank sees facing hunger in East and Southern Africa due to food prices and drought

Stir in Some Drought and Bring to a Boil

Droughts in 2025 and early 2026 also have stressed parts of southern Africa (Zimbabwe, Namibia, Somalia, Botswana, Angola and Mozambique), South America (the Amazon Basin and Argentina), Asia (China and India) and the Middle East (Iran).

The U.S. Drought Monitor identifies moderate to severe droughts across the U.S. in south Texas, central Oklahoma, much of Arkansas, southern Georgia and Florida, along with areas in South Dakota, Nebraska and Colorado, among others.

Globally, the World Bank sees "more than 87 million people are facing hunger in East and Southern Africa, and 52 million are projected to be acutely food insecure in West and Central Africa by mid-2026."

Key Takeaways

• Northern hemisphere food prices may be stable for this year, because fertilizer stockpiling began before the war.
• But the longer the blockage of Strait of Hormuz continues, restricting oil, natural gas and fertilizer components, the greater the risk of food inflation.

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About Industrial Info Resources
Industrial Info Resources is the leading provider of industrial market intelligence. Since 1983, Industrial Info Resources has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. Industrial Info Resources's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking more than 250,000 current and future projects worth $30.2 trillion (USD).