Food prices face volatility as fossil fuel dependence deepens in agri-food systems, warns report

Food systems are making alarming contributions to the growth of fossil fuels, even as other sectors have begun decarbonizing, reveals a new report by the International Panel of Experts on Sustainable Food Systems (IPES-Food). The think tank warns that political instability and increasing oil prices may increase food prices as energy and food remain intertwined.

The analysis reveals that about 40% of all petrochemicals are consumed by food systems through synthetic fertilizers and plastic packaging. Petrochemicals are the single largest driver of oil demand growth, so there is a need to delink food from oil to avoid mass hunger.

“Industrial food production runs on fossil fuels — especially because of the synthetic fertilizers and pesticides used to grow commodity crops like maize, wheat, and soy. This makes the entire food chain dangerously exposed to fossil fuel market volatility,” Nicole Pita, project manager at IPES-Food, tells Food Ingredients First.

“When oil and gas prices spike, so do the costs of farming inputs, and food prices quickly follow.”

Pita says a similar scenario played out during the COVID-19 pandemic and the war in Ukraine when fertilizer costs peaked, resulting in widespread food insecurity. “These shocks were magnified by financial speculation and profiteering in increasingly concentrated agri-food markets.”

Increasing geopolitical hostilities, such as Israel’s recent strikes on Iran and the following exchange of fire, can further expose the food sector’s vulnerability.

“The conflict in the Middle East has already halted some oil output and pushed up oil and urea prices — a signal of what’s to come. If the situation escalates, we’re likely to see ripple effects across fertilizer production, shipping, processing, and refrigeration — all of which rely on fossil fuels,” says Pita.

“These shocks hit food systems hard, especially in import-dependent countries. This is a wake-up call for governments and businesses alike: decoupling food from fossil fuels is not just about climate but resilience, stability, and food security.”

She warns that the short-term risk for F&B companies is rising costs.

“But the more dangerous threat is that these fossil fuel price shocks trigger another global food crisis — and further erode trust in an already fragile and highly concentrated food system.”

Fossil fuelled-systems

The report, Fuel to Fork: What will it take to get fossil fuels out of our food systems?, notes that 99% of synthetic nitrogen fertilizers and pesticides are derived from fossil fuels. Some 70% of global ammonia — which relies on fossil fuels — is used to make fertilizers.

According to the FAO, while industry-led solutions, such as blue ammonia, may help the transition to green ammonia, they are unlikely to significantly impact agriculture in the short term.

Pita says there is more to these alternatives than meets the eye: “High-tech fixes like ‘blue’ ammonia fertilizers made from fossil gas with carbon capture, or digital agriculture platforms often come bundled with fossil fuels and corporate control. These technologies may look innovative but entrench proprietary systems, delay real transformation, and divert attention from proven, people-led approaches like agroecology.”

When oil and gas prices spike, so do the costs of farming inputs, and food prices quickly follow, warn experts.The report warns that F&B companies should remain cautious about adopting such seemingly advanced solutions, as they might worsen the power imbalances in food systems by, for example, trapping farmers in industrial monoculture systems.

“In F&B manufacturing, swapping petroleum-based plastics with bioplastics may sound sustainable — but bioplastics are often made from food crops grown with fossil-based fertilizers and contain fossil-derived additives. They leach toxins, compete with food production, and reinforce industrial agriculture,” says Pita.

“Companies must interrogate the full lifecycle of these ‘solutions’ and avoid falling for greenwashed technologies that prolong the problem rather than solving it.”

Agroecology and reusable packaging

As global governments reiterate commitments to move away from fossil fuels, the oil and gas industry is increasingly turning to petrochemicals, particularly agrochemicals and plastic food packaging, as the next big opportunity. 

However, there are feasible alternatives for F&B companies to safeguard against price shocks. “Switching to local, organic, and agroecological sourcing can slash reliance on fossil-based fertilizers,” notes Pita.

“In F&B packaging, the dominance of petroleum-based plastics is an environmental liability. Companies should first avoid single-use plastics. Reuse systems — once standard in the beverage industry — have plummeted, yet studies show they can cut environmental impacts and save costs.”

Shorter and more localized supply chains can make these systems viable again, reducing packaging waste and fossil fuel use.

Global inequities

The report notes that food ceases to be essential to high-level climate conversations despite deep inequalities embedded in modern food and energy systems.

“Wealthy nations built today’s fossil-fueled food system — and the Global South is paying the price. Industrial agriculture, dominated by a handful of commodity crops and powered by fossil-based fertilizers, pesticides, and plastics, was pioneered and expanded by high-income countries. These same countries continue to issue record oil and gas licenses and pour billions into fossil fuel and agrochemical subsidies,” Pita stresses.

“Meanwhile, Global South countries are trapped in a cycle of debt and dependence and are hit hardest by climate shocks and food price spikes. Many rely heavily on staple food imports while facing rising borrowing costs and unsustainable debt. To pay down debts, they’re often pushed to export cash crops instead of growing food for local consumption — reinforcing long-term dependence on imports and fossil-fueled agriculture.”

Pita urges bold action to address these “deep injustices” within the food and energy nexus.

“Wealthy nations must phase out fossil fuel and agrochemical subsidies and lead a just transition to renewable energy, agroecological farming, and healthy diets.”