Impact of War on Food Economy

US residents reject increasingly authoritarian leadership. The US and Israeli military attacks on Iran at the end of February 2026, which ultimately ignited the geopolitical crisis over the past month, have resulted in serious impacts on the global food economy. Many analysts fear that the current war in the Middle East could trigger a global food crisis, as rising energy prices have increased logistics and trade costs, leading to surges in prices of essential agricultural inputs, particularly fertilisers and other crucial production factors.US Agriculture Secretary Brook Rollins stated that one in four US farmers lacks sufficient fertiliser supplies for the current spring planting season in March-April. Urea fertiliser prices at the Port of New Orleans, US, have surged to US$155 per tonne compared to pre-war prices in February 2026.Fertiliser prices are expected to continue rising, from US$585 per tonne FOB (free on board) at the beginning of March 2026 to US$645 per tonne by the end of March 2026. Around 25% of US farmers are delaying urea purchases due to extremely high price uncertainty. The phenomenon of US agricultural company bankruptcies, which reached 46% in 2025, is feared to surge in 2026.The USDA (US Department of Agriculture) February 2026 report indicates that around 16,000 US farms closed in 2025, bringing the total to 2 million US farms that have gone bankrupt since 2018. For Indonesia, the most terrifying impact of the war is the rise in food prices, as increased subsidy costs and food inflation risks affect public welfare and the national economy.This article discusses and details the impact of the US-Israel vs Iran war on the food economy, possible scenarios that may occur, and offers mitigation strategies and policy solutions that need to be implemented by the government, business world, and the general public.The blockade of the Strait of Hormuz, as one consequence of the Middle East war, has driven up global oil prices, as around 20-21 million barrels of the world’s oil (about 20% of global seaborne oil trade) pass through the Strait of Hormuz.Additionally, this strategic maritime route contributes to 45% of the world’s main fertiliser distribution. The blockade of the Strait of Hormuz has disrupted the global supply and distribution balance of fertilisers. It is true that Indonesia can produce urea domestically using domestic natural gas as raw material, relying on PT Pupuk Indonesia, which produces 9.4 million tonnes of urea annually.However, Indonesia and many other countries heavily rely on imports for other essential agricultural production factors such as phosphate (P2O5) and potash (KCl), which are largely mined in the Middle East and must pass through the Strait of Hormuz. The fertiliser production system is inherently linked to energy costs because natural gas is the main raw material for urea, and energy is required to process other types of fertilisers.The blockade of the Strait of Hormuz has pushed global oil prices close to US$100 per barrel. Many analysts predict that global oil prices could reach US$150 per barrel, which will certainly increase fertiliser production and distribution costs.The subsequent impact is that average global food prices will also rise, reducing food accessibility and even increasing global poverty, potentially causing a global food crisis like that in 2008. An important lesson from the 2008 global food crisis is that global oil prices are closely linked to food and other agricultural product prices.In spot trading and futures trading on the Chicago Board of Trade (CBOT), New York Board of Trade (NYBOT), Tokyo JPX, and others, agricultural commodity prices are generally strongly tied to rises in global oil prices. Although global agricultural commodity trade routes do not necessarily go around the African continent through the Indian Ocean and Atlantic Ocean waters, the connection between global oil prices and price formation in the aforementioned global commodity exchanges is very strong. At that time, global oil prices up to US$150 per barrel drove up prices of strategic foods such as wheat, rice, meat, and milk.Indonesia and many developed countries in the US and EU, which have somewhat abundant natural resources, have tried to develop biofuels (BBN or biofuels), which also rapidly increase global vegetable oil demand. Biofuel development policies in developed and developing countries have caused a shift in the utilisation of food and agricultural commodities, not only to meet food needs but also for energy. As a result, prices of world oils and fats that can be used for energy have risen sharply. Global prices of crude palm oil (CPO), corn, soybeans, sugarcane, rapeseed, and others, which have long been used as food and vegetable oil sources, have increased significantly over the past two years.Similarly, the tendency for rising investment values (speculation) in food commodities on global commodity markets compared to global financial markets that were also shrouded in uncertainty at that time. At that time, the process of stock speculation by investors in food commodity futures markets mixed with the weakening of global financial markets or major world stock exchanges, and temporarily weakened the US dollar exchange rate against other world currencies. In global financial market terms, there was a phenomenon of low inventory stocks at that time, which also indicated very high market volatility levels. As a result, food prices in global markets were ‘held hostage’ by decisions of a handful of large-scale investors (speculators), which did not actually reflect classical trading principles.