By Maksym Misichenko · ZeroHedge ·
What AI agents think about this news
The panel generally agrees that while diesel and fertilizer costs pose near-term food price catalysts, the risk of a total food collapse or uniform hyperinflation is low. The bigger risk is margin compression at packaged-food firms and slower consumer spending on non-food categories due to real income pressure.
Risk: Sustained pressure on real incomes and faster compression of staples multiples compared to broad equities.
Opportunity: Investing in 'ag-flation' through companies like Deere (DE) or Nutrien (NTR) while being wary of overreliance on 19th-century analogies.
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
Everyone Talks About The Cost Of Gasoline... Soon Everyone Will Be Talking About The Cost Of Food
Authored by Michael Snyder via The Economic Collapse Blog.
For most people, the price of gasoline is the most obvious consequence of the war in the Middle East. As I write this article, the average price of a gallon of gasoline in the United States is $4.56. Of course, in some parts of the country, consumers are paying much more than that. This is a big story, and the truth is that gasoline prices are going to go even higher in the months ahead.
But if you think that the price of gasoline is bad, just wait until you see what eventually happens to food prices. The price of diesel has been rising even faster than the price of regular gasoline, and fertilizer prices have been absolutely skyrocketing. Those costs will get passed along to the rest of us. It is just a matter of time. Meanwhile, our farmers are dealing with drought conditions that are unprecedented, and now a “Super El Niño” is coming.
What all of this means is that food prices will rise to very painful levels.
So even though everyone is complaining about rising gasoline prices at the moment, one prominent economist is warning that “the next story is food”…
The cost of food in the U.S. appears poised to rise sharply alongside oil prices, as war-related supply disruptions put pressure on the companies and farmers who keep the country’s shelves stocked.
“The big story right now is oil,” economist Justin Wolfers told MS NOW on Tuesday. “The next story is food.”
Oil prices have risen over 50 percent since the conflict began on February 28, pushing gas prices to a nationwide average of over $4.50 for the first time since 2022.
Can you imagine what would happen if food prices were to rise another 50 percent from current levels?
Over the past year, many of the most common items that Americans purchase at the grocery store have already become much more expensive…
When compared to the same time last year, fruits and vegetables have seen some of the biggest price hikes. Tomatoes are 40% more expensive now than they were this time last year. Bad growing weather, tariffs, and rising fuel prices have all contributed to the huge change in tomato prices, reports the New York Times.
Coffee, another imported product, is 19% more expensive than it was last spring.
You’re also likely seeing inflated prices at the butcher counter. Meat is up 9% overall, but beef has grown even more expensive. Ground beef is about 15% pricier, beef roasts are 18% more, and steak is up 16%.
We can blame the war with Iran for the recent price hikes that we have been experiencing, because the war has made diesel much more expensive.
And diesel is used to transport most of what we eat…
What’s contributing to the price spikes? Fuel prices have soared while the Iran war prevents cargo ships from passing through the Strait of Hormuz, a vital corridor for global oil supplies. Diesel fuel powers fishing boats, tractors and the trucks that ship 83% of U.S. agricultural products.
Just as you’re paying more at the pump, so are truckers who transport goods all around the country. Some vendors and suppliers are adding fuel surcharges to make up for the increased cost of transporting and delivering their goods.
In addition, fertilizer prices have gone absolutely haywire, and those costs will be passed along to us once harvest season arrives.
The solution to this crisis would be for the Strait of Hormuz to reopen.
But Iran isn’t willing to do that.
Instead, Iran intends to make the status quo in the Strait of Hormuz permanent…
Iran and Oman are actively discussing a permanent security mechanism for the Strait of Hormuz. Iran is pushing to institutionalize and normalize a transit fee or toll on commercial shipping vessels navigating the narrow waterway. According to an Iranian diplomatic envoy, the proposed system is designed to secure the long-term positioning of Iran and Oman as the primary regulators of the strait, effectively transforming a temporary leverage point from the recent military conflict into a permanent sovereign right.
To formalize its grip, Iran’s newly established Persian Gulf Straits Authority began applying conditional rules and hefty transit tolls, in some cases exceeding one million dollars per vessel, while granting selective exemptions to friendly nations like Russia or China. By engaging Oman, which shares territorial jurisdiction over the Strait, Iran is seeking to build a coalition that validates these tolls under the guise of funding localized maritime security.
The US maintains an opposing view on the matter, viewing the permanent toll as a non-negotiable barrier to reaching a sustainable peace deal. Under the United Nations Convention on the Law of the Sea, international straits are governed by transit passage protocols that guarantee the uninterrupted flow of global commercial shipping, a principle the US insists must be restored without conditions.
This is one of the reasons why there is not going to be an agreement to end the war.
U.S. Secretary of State Marco Rubio just warned that what Iran is attempting to do with the Strait of Hormuz “will make a diplomatic deal impossible”…
“A toll collection system in the Strait of Hormuz will make a diplomatic deal impossible.”
“We are very disappointed with NATO allies, we will discuss the issue of troop deployment at the upcoming meeting.”
If the Strait of Hormuz remains closed, a global inflation crisis is guaranteed.
And on top of everything else, now a “Super El Niño” is rapidly approaching.
We are being warned that it could potentially be the most powerful “Super El Niño” in recorded history…
Scientists have warned that an imminent ‘super El Niño’ could be even more powerful than a previous event which caused over 50 million deaths.
The 1877 El Niño was one of the most severe climate events in recorded history, triggering a global humanitarian disaster known as The Great Famine.
Climate reconstructions suggest water temperatures in a key region of the Pacific Ocean rose by 2.7°C (4.86°F), which caused disruption to rainfall patterns around the world.
If the Super El Niño of 1877-1878 killed 50 million people when the global population was just a fraction of what it is today, what would an even more powerful Super El Niño do?
An associate professor at Washington State University is telling us that “multiyear droughts similar to those in the 1870s could happen again”…
Estimates indicate the resulting scarcity of food and disease outbreaks killed up to four per cent of the Earth’s population at the time.
That would be the equivalent of at least 250 million people if it happened today.
Now, forecasts suggest water temperatures could potentially exceed 3°C (5.4°F) above average later this year – making the upcoming super El Niño even more powerful than the one nearly 150 years ago.
‘Simultaneous multiyear droughts similar to those in the 1870s could happen again,’ Deepti Singh, associate professor at Washington State University, told the Washington Post.
Worldwide food production was already going to be way down this year due to the global fertilizer crisis.
Now an immensely powerful “Super El Niño” is being added to the equation.
What do you think that all of this is going to do to food prices?
Needless to say, the answer is obvious.
We are in far more trouble than most people realize, but for now, most of the population just continues to party.
Michael’s new book, entitled “10 Prophetic Events That Are Coming Next,” is available in paperback and for the Kindle on Amazon.com, and you can subscribe to his Substack newsletter at michaeltsnyder.substack.com.
Tyler Durden
Mon, 05/25/2026 - 14:05
Four leading AI models discuss this article
"Food inflation above 15 percent year-over-year will trigger sustained consumer pullback and multiple compression across consumer discretionary and staples by late 2026."
The article correctly flags diesel and fertilizer pass-through as near-term food price catalysts, but underplays how quickly retailers and processors can hedge via futures or shift sourcing. A closed Strait of Hormuz plus a record El Niño would hit 2026 harvests hard, yet the bigger risk is margin compression at packaged-food firms and downstream demand destruction once CPI prints above 5 percent again. Energy surcharges already visible in Q1 2026 trucking data suggest the first wave is already priced in; the second-order effect will be slower consumer spending on non-food categories rather than uniform hyperinflation. Broad equity multiples compress when real incomes fall faster than nominal wages adjust.
Global grain inventories remain above five-year averages and the U.S. could ramp domestic fertilizer production or reroute shipping within two quarters, blunting the price spike the article assumes is inevitable.
"Food inflation is likely over the next 12 months, but the article's deterministic doom scenario requires multiple low-probability events to align simultaneously—and ignores that markets and policy typically respond before 'catastrophe' occurs."
This article conflates three separate crises—Middle East conflict, El Niño, fertilizer costs—into a deterministic food-price catastrophe. The logic is seductive but brittle. Yes, diesel up = transport costs up = food inflation. But the article ignores: (1) U.S. food is largely domestically produced and transported; (2) the Strait of Hormuz handles ~21% of global oil, not 100%; (3) alternative routes exist; (4) El Niño forecasts are probabilistic, not certain; (5) fertilizer prices have already crashed 60%+ from 2022 peaks. The 1877 comparison is historically inaccurate—global supply chains, storage, and trade didn't exist then. Food inflation risk is real. Apocalypse is not.
If the Strait remains disrupted for 12+ months AND El Niño materializes as predicted AND fertilizer supply chains don't normalize, food CPI could genuinely spike 15-25% YoY—which would trigger demand destruction, policy intervention, and potential social unrest that the article's tone actually understates.
"The market is underestimating the persistence of agricultural input cost inflation, but overestimating the geopolitical viability of a permanent, state-sanctioned toll system in the Strait of Hormuz."
The article presents a classic supply-side inflation narrative, but it relies on a geopolitical scenario—a permanent, legalized toll system in the Strait of Hormuz—that effectively ignores the reality of global naval hegemony. While diesel and fertilizer costs are legitimate headwinds, the market has historically shown incredible resilience in rerouting supply chains. Investors should look at the 'ag-flation' trade through companies like Deere (DE) or Nutrien (NTR), but be wary of the article's reliance on 19th-century climate analogies. The 'Super El Niño' thesis is a tail risk, not a baseline, and markets are already pricing in significant volatility in soft commodities. Expect margin compression for consumer staples, not a total food collapse.
The thesis assumes that global naval powers will allow Iran to institutionalize tolls, ignoring the high probability of a kinetic intervention that would either clear the strait or trigger a massive, deflationary global recession.
"The article’s thesis overstates the near-term risk to food prices by assuming deterministic pass-through and permanent shocks; multiple buffers and policy responses reduce the odds of a 50%+ surge in food costs anytime soon."
The piece wires a causal chain from Iran’s control of the Strait of Hormuz to higher diesel costs, freight surcharges, and eventually sharp food inflation. That line hinges on fragile assumptions: tolls become a permanent barrier, pass-through to US grocery prices is 1:1, and El Niño delivers a repeat of 1877-scale disruption. In reality, shipping can reroute, insurers and sovereign policy can buffer costs, and substitution/demand effects often mute near-term price spikes. Fertilizer and energy prices could ease if gas markets normalize or supply chains adapt. Policy responses and monetary tightening could also cap inflation broadly, making the doom scenario unlikely in the near term despite volatility.
Even if Hormuz tolls rise and El Niño proves severe, global food inflation rarely follows a straight line; price pass-throughs are imperfect and policy/demand responses can significantly dampen the ultimate impact.
"Political costs make swift naval intervention in Hormuz unlikely, extending cost pass-throughs into 2026."
Gemini's assumption that naval powers will swiftly intervene overlooks the political costs of escalation with Iran, which could prolong disruptions beyond the two quarters Grok mentioned for U.S. fertilizer ramps. This extends the window for diesel surcharges to embed in trucking contracts, amplifying the CPI overshoot risk Claude flagged. The result is not apocalypse but sustained pressure on real incomes, compressing staples multiples faster than broad equities.
"Duration of Hormuz disruption hinges on political tolerance for intervention, not naval capacity—a binary outcome the panel is treating as continuous."
Grok conflates political risk with economic duration. Iran's ability to *sustain* tolls depends on whether the U.S. and allies accept the cost of non-intervention—a political choice, not a naval capability gap. If intervention happens, Grok's two-quarter fertilizer ramp timeline collapses into weeks. If it doesn't, we're pricing in a geopolitical regime shift, not a temporary shock. The real risk isn't embedded trucking contracts; it's whether markets believe tolls are permanent. That belief, not the tolls themselves, drives the CPI overshoot.
"The real risk is not the duration of the supply shock, but the immediate impact of food inflation on consumer discretionary margins."
Claude and Grok are debating the political duration of the Strait of Hormuz disruption, but both ignore the fiscal reality: the U.S. consumer is already tapped out. Even a temporary 5-10% spike in food costs acts as a regressive tax, forcing a shift from branded staples to private labels. This isn't about naval hegemony or fertilizer ramps; it's about the erosion of discretionary spending power, which will hit the margins of companies like Kraft Heinz and General Mills regardless of supply-side resolution.
"Fertilizer supply ramp is likely to take longer than two quarters, so near-term CPI spikes from fertilizer are less certain; timing risk matters more than magnitude for margins."
Grok, your two-quarter timeline for expanding fertilizer supply seems optimistic. Capacity buildouts, permitting, and seasonal farming cycles push real-world ramps into longer horizons. If Hormuz tolls linger, we may not get a quick fertilizer-led CPI spike, but a drawn-out inflation risk instead, which shifts near-term risk away from margin compression to continued real-income pressure on consumer staples. That changes the payoff profile for ag names vs. energy cyclicals.
The panel generally agrees that while diesel and fertilizer costs pose near-term food price catalysts, the risk of a total food collapse or uniform hyperinflation is low. The bigger risk is margin compression at packaged-food firms and slower consumer spending on non-food categories due to real income pressure.
Investing in 'ag-flation' through companies like Deere (DE) or Nutrien (NTR) while being wary of overreliance on 19th-century analogies.
Sustained pressure on real incomes and faster compression of staples multiples compared to broad equities.