It’s Not a Food-Price Crisis.

It’s a System Failure.

We have been focusing on oil prices. However, the current situation goes far beyond an energy shock.

This is a systemic food crisis, and current policy frameworks are not adequately prepared to manage it.

The Iran War as a Systemic Shock

The Strait of Hormuz is one of the world’s most critical chokepoints for energy and fertilizer trade. Approximately 20% of global oil trade and a significant share of fertilizer and ammonia flows pass through this corridor (IEA; World Bank).

Modern agriculture is fundamentally energy-dependent:

• Nitrogen fertilizers are produced via the Haber–Bosch process using natural gas
• Agricultural machinery relies on diesel
• Logistics depend on fossil fuels
• Packaging is largely petroleum-based

• Diesel prices in the United States exceeded 5 USD per gallon in March 2026, reflecting sharp short-term volatility (EIA; Forbes, 2026)
• Global fertilizer prices increased by 30–35% in early-stage disruption scenarios (Fertilizer Institute; Fortune, 2026)
• Transport and logistics costs are rising due to fuel and insurance premiums
• Global food prices remain elevated, still above pre-COVID levels (FAO Food Price Index)

This Time Is Different: Limited Substitution Capacity

Unlike the Russia–Ukraine crisis, substitution options are more constrained.

According to FAO Chief Economist Máximo Torero:

• There is limited short-term substitution for Gulf-based fertilizer and energy supply
• Fertilizer production is geographically concentrated
• Natural gas dependency is structural
• Global supply chains prioritize efficiency over resilience

The most exposed regions include:

• South Asia
• East Africa
• Middle East (including Türkiye)

These regions are highly dependent on imported fertilizers, energy, and staple commodities (FAO; IFPRI).

The Real Crisis: Nutritional Degradation (Hidden Hunger)

The dominant discussion focuses on prices. The deeper issue is declining nutritional quality.

• Adequate caloric intake
• But insufficient protein
• And deficiencies in micronutrients

Evidence from the Asian financial crisis (Elmira & Qaim, 2025) shows:

• Food price increases led to higher child stunting rates
• At the same time, overweight and obesity increased

This reflects dietary substitution:

• From nutrient-dense foods
• Toward calorie-dense, low-cost foods

Urban households are typically more vulnerable to food price shocks because they rely on market purchases, whereas rural households often produce part of their own food (Headey et al., 2020; Elmira & Qaim, 2025).

The Agronomic Blind Spot

Despite the scale of the crisis, key agronomic levers remain underutilized:

• Nitrogen Use Efficiency (NUE)
• Soil pH management
• Micronutrient management
• Soil organic matter restoration

In addition:

• Biostimulants are not yet widely scaled
• Precision agriculture adoption remains uneven
• Integrated nutrient management is insufficiently implemented

Structural Shifts in Production

Input cost pressures are already influencing cropping decisions.

For example:

• Farmers may shift from nitrogen-intensive crops (e.g., maize)
• Toward less input-intensive crops (e.g., soybean)

This creates downstream effects:

• Feed supply constraints
• Higher livestock production costs
• Increased meat and dairy prices
• Reduced affordability of protein

Communication as a Policy Lever

Farmers do not act primarily on technical reports.

They respond to:

• Prices
• Risk perception
• Trust in institutions and suppliers

Effective policy therefore requires:

• Decision-support systems
• Behavioral and risk communication tools

A System Under Stress

This crisis operates simultaneously across four interconnected layers:

1. Energy dependency
2. Fertilizer supply concentration
3. Farmer behavioral response
4. Nutritional degradation

These dynamics reinforce each other and increase systemic risk.

Conclusion: A Systemic Crisis

This is no longer:

• An agricultural issue
• A food price issue
• Or an energy issue

It is a systemic crisis. If no action is taken:

• Food prices will remain volatile
• Nutritional quality will decline
• Long-term human capital outcomes will deteriorate

Policy Implications

A structured response should include:

• Integrated risk management across energy, agriculture, and logistics
• Monitoring systems for input use, yields, and food prices
• Scenario-based planning for short- and long-term shocks
• Early warning systems and real-time market dashboards

Priority should be given to:

• Smallholder farmers
• Import-dependent economies

as they represent the most vulnerable segments of the global food system.

The Key Question

What will farmers do next?

• Reduce fertilizer use?
• Shift crop systems?
• Accept lower yields?

Or tansition toward a new production paradigm?

Dr. Merve Kaya

Global AgriTech Strategist

References

• Elmira, E. S., & Qaim, M. (2025). Macroeconomic shocks and long-term nutritional outcomes. Global Food Security
• FAO (2024–2026). Food Price Index Reports
• IFPRI (2026). Food Policy and Price Sensitivity Analyses
• Headey, D. et al. (2020). Food price shocks and household welfare
• World Bank (2023–2025). Fertilizer and Food Security Outlook