New Delhi: Global financial services firm JPMorgan has warned that the world could face a sharp rise in food inflation in 2027 if three major risks converge fertilizer shortages, geopolitical tensions and a potentially strong El Niño event.
The bank expects global food inflation to rise to around 5% in the first half of 2027, up from 2.8% in the first half of 2026. The warning is especially relevant for India, which is already dealing with rising fertilizer costs and remains heavily dependent on the monsoon for agricultural output.
Fertiliser Supply Key Risk
JPMorgan said the Middle East accounts for about 42% of global urea exports and 27% of ammonia exports, making the region crucial to global fertiliser supply. Any prolonged disruption around the Strait of Hormuz could push up fertiliser prices and affect availability worldwide.
The report also noted that natural gas, a key raw material used in manufacturing nitrogen fertilisers such as urea, could become more expensive if energy markets remain volatile. Higher gas prices would raise production costs, while farmers using less fertiliser because of price pressure could lead to lower crop yields.
JPMorgan estimated that if fertiliser capacity is damaged, it may take one to four years to fully recover, while some natural-gas facilities could take three to five years to return to normal.
India’s Fertiliser Subsidy Burden May Rise
India is among the world’s largest buyers of urea. Farmers currently pay only around ₹266.50 for a 45-kg bag, with the government absorbing most of the cost through subsidies.
However, the subsidy bill is already becoming increasingly expensive. According to the report, India’s fertiliser subsidy could exceed $31 billion in the current financial year. If global disruptions continue, the burden on the exchequer could rise further.
That could leave the government with difficult choices either continue to keep fertiliser prices low through subsidies or encourage lower fertiliser consumption and risk resistance from farmers who depend on crop yields for income.
El Niño Could Add To Food Inflation
JPMorgan also warned that a developing El Niño could become unusually strong by the end of 2026. The bank estimated an 81% probability of a very strong or “super” El Niño and a 97% probability that El Niño conditions could continue into 2027.
A strong El Niño could disrupt rainfall and temperature patterns across major agricultural regions. JPMorgan said such an event could add about 0.7 percentage points to global food inflation at its peak, and as much as 1.3 to 1.5 percentage points if higher energy prices are also factored in.
For India, this is particularly important because the southwest monsoon remains critical for agriculture and water availability. A weak or erratic monsoon can affect major crops such as rice, pulses, oilseeds, cotton and sugarcane, potentially pushing wholesale and retail food prices higher.
Not A Food Shortage Warning, But An Inflation Warning
JPMorgan said the risk is not necessarily of markets running out of food, but of higher food inflation and supply pressure. The report noted that global grain inventories remain adequate and rice stocks in Asia are relatively healthy, including India’s strong rice reserves.
Even so, the report warned that inventories can only cushion a shock for a limited time. Long-term pressure from higher farm input costs, weaker harvests and geopolitical disruptions could still strain food security and inflation control.
For India, the warning underscores the need to diversify fertiliser supplies, strengthen climate-resilient agriculture and prepare for possible external shocks that may affect farm production and prices.
