JP Morgan has issued a warning about a serious global food crisis that is projected to have a significant impact as early as next year. The analytical firm JP Morgan is sounding the alarm regarding the Global Food Crisis.
According to the report, by 2027, the global food system could face a new supply crisis caused by escalating geopolitical tensions, fertilizer shortages, and increased threats related to climate change. A sharp rise in agricultural costs and a potential decline in yields are forecasted, which will lead to a global food crisis.
As part of its warning, JP Morgan also presented a worrying forecast: world inflation could approach 5% in the first half of 2027, compared to 2.8% in the first half of 2026. However, the report indicates that this is not just about sudden food shortages but a larger problem.
Agricultural producers may face rising expenses and a lack of essential products, while changing weather conditions threaten production.
JP Morgan specifically highlighted India, Brazil, and Indonesia as countries where the combination of fertilizer supply disruptions and the impact of El Niño could become particularly critical. India has already faced strategic difficulties that could arise with reduced global agricultural output. If this warning proves true, it could lead to higher food prices, especially in developing economies where a significant portion of household income is spent on food.
JP Morgan identifies El Niño and fertilizer shortages as the main culprits behind this food crisis. There is a close link between the fertilizer market and the food market. According to the report, the Middle East accounts for about 42% of global urea exports and 27% of ammonia exports, making the region a key source of nitrogen fertilizers.
Supply chain disruptions related to the situation around the Strait of Hormuz are exacerbated by rising natural gas prices. Urea, as a nitrogen fertilizer, is necessary during sowing and early crop growth stages; underutilization during this period can reduce yields, even if supplies recover later.
Experts estimate that a full recovery of damaged fertilizer production could take one to four years, and repairing some natural gas extraction facilities could require three to five years. Experts presented a Global Food Crisis diagram illustrating the sequence: war $\rightarrow$ energy crisis $\rightarrow$ fertilizer shortage $\rightarrow$ increased agricultural costs $\rightarrow$ reduced fertilizer use $\rightarrow$ low yields $\rightarrow$ higher food prices.
The food crisis is driven not only by fertilizer scarcity but also by climatic factors. JP Morgan asserts that an evolving El Niño can alter rainfall and temperature patterns in key agricultural regions, increasing the risk of droughts, floods, and other extreme weather events.
Historically, El Niño events have been linked to an average decrease in tropical zone production of 3.5%, while temperate regions have seen a growth of 2.4%. In JP Morgan's view, a super El Niño could increase global food inflation by approximately 0.7%, and when combined with rising energy prices, up to 1.3–1.5%.
An unstable or weak monsoon can negatively affect crops such as rice, legumes, oilseeds, cotton, sugarcane, and others dependent on rainfall. The consequences will extend beyond the fields: reduced domestic supply will lead to higher wholesale prices and, ultimately, increased retail inflation.
JP Morgan notes that for India, the issue is not only about having sufficient food but also about farmers' ability to maintain production at affordable prices despite instability in global fertilizer and energy markets. Mitigating factors mentioned include adequate global grain stocks and relatively good rice reserves in Asia.