Prolonged Iran Conflict Could Drive Continued Global Food Price Increases: What This Means for Your Business Investments
PARIS — World food prices rose in March to their highest levels since September of last year, with the potential for further increases if the ongoing Middle East conflict, which has driven up energy costs, persists, the United Nations Food and Agriculture Organization (FAO) reported on Friday.
FAO Chief Economist Maximo Torero noted that the price increases since the onset of the conflict have been relatively modest, primarily influenced by rising oil prices and stabilized by ample global cereal supplies. However, he warned that if the conflict extends beyond 40 days and input costs remain elevated, farmers might reduce the use of inputs, plant less acreage, or switch to crops that require less intensive fertilizer. Such adjustments could adversely affect future yields and influence global food supply and commodity prices throughout this year and the next.
The FAO Food Price Index, which tracks changes in a basket of internationally traded food commodities, increased by 2.4 percent from a revised February figure. It stands 1 percent higher than a year ago but nearly 20 percent below the peak reached in March 2022 following the onset of the war in Ukraine.
The cereal price index rose by 1.5 percent compared to the previous month, driven largely by a 4.3 percent increase in international wheat prices. This was due to deteriorating crop prospects in the United States and expected reductions in plantings in Australia amid rising fertilizer costs.
Global maize prices saw a slight rise as ample supplies balanced concerns over fertilizer expenses and were supported indirectly by increased ethanol demand connected to higher energy prices. In contrast, rice prices fell by 3 percent, influenced by seasonal harvest timing and weakened import demand.
Vegetable oil prices climbed 5.1 percent in March, marking the third consecutive monthly increase. Gains in palm, soy, sunflower, and rapeseed oil prices reflected the impact of rising global energy prices and anticipated stronger biofuel demand. Palm oil prices hit their highest level since mid-2022.
Sugar prices surged 7.2 percent to reach their highest point since October 2025. This increase was driven by higher crude oil prices, which raised expectations that Brazil—the world’s largest sugar exporter—would divert more sugarcane production towards ethanol.
Meat prices rose by 1 percent, led by increases in pig meat prices in the European Union and bovine meat prices in Brazil, while poultry prices showed a slight decline.
In a separate update, the FAO modestly raised its forecast for global cereal production in 2025 to a record 3.036 billion metric tonnes, representing a 5.8 percent increase from the previous year.
— Reuters
Special Analysis by Omanet | Navigate Oman’s Market
The rising global food prices driven by escalating energy costs and geopolitical tensions present both risks of increased operational expenses for Omani food and agricultural businesses and opportunities for investment in sustainable agriculture and alternative biofuels. Smart investors and entrepreneurs should consider diversifying into less input-intensive crops and biofuel production to hedge against volatility and capitalize on shifting global demand dynamics.
