KEY POINTS

• El Niño could impose up to $11 trillion in losses on the global economy, with lasting consequences for food security.
• Small-scale farmers, who produce a third of the world’s food, face rising costs from energy and fertiliser shocks.
• IFAD says combining access to farm inputs, markets and finance can reduce income losses from simultaneous drought and price shocks by nearly half compared with finance-focused interventions alone.

MAIN STORY

The global economy could lose as much as $11 trillion from the effects of El Niño, with small-scale farmers and rural communities facing prolonged pressure on food production and household incomes, according to a report by the International Fund for Agricultural Development (IFAD) and Türkiye’s Ministry of Agriculture and Forestry.

The report, titled Food Systems Under Stress: Building Resilience from the First Mile, identifies El Niño as one of several overlapping climate and economic shocks threatening food systems, particularly the livelihoods of small-scale producers.

It was released on the sidelines of COP30, where the report’s authors called for coordinated investment in agricultural production, market access and financial services to help rural communities withstand future disruptions.

The report noted that energy and fertiliser shocks in 2026 spread across food systems within a single planting season, increasing costs at different stages, from farm production and processing to transportation and distribution.

Small-scale farmers, who produce about one-third of the world’s food, were identified as particularly exposed to these pressures.

IFAD argued that isolated interventions are insufficient because farmers need more than access to inputs to maintain their livelihoods. They also require markets to sell their produce and financing to invest in their farms and manage risks.

The report’s modelling showed that when farmers receive finance-focused support, such as insurance, their income losses during simultaneous drought and price shocks fall by 9.8 per cent.

However, when support combines access to inputs, markets and finance, income losses decline by 18.7 per cent, almost twice the reduction achieved through finance-focused intervention alone.

IFAD President, Alvaro Lario, said evidence from the organisation’s investment portfolio showed that connecting these areas produced stronger results, including income increases of more than 40 per cent, gains reported by nearly all participating households and a 75 per cent rise in technology adoption.

The report cited examples from Kenya, Bangladesh and Türkiye to demonstrate how coordinated support can improve farm productivity and incomes.

In Kenya, farmers who received training in fertiliser micro-dosing and agroforestry, alongside access to seeds, fertilisers, drought insurance and bulk grain buyers, doubled their resilience to drought.

In Bangladesh, combining solar-powered irrigation, vermicomposting training, credit and food-safety certification helped farmers reduce production costs and access higher-value markets. Household incomes rose by 50 per cent.

In Türkiye, grants combined with solar-powered irrigation, greenhouses, orchard development and improved market, storage and processing facilities helped farmers increase incomes by 40 per cent.

Türkiye’s Minister of Agriculture and Forestry, Ibrahim Yumakli, said preparedness required investment before crises occurred, particularly in water access, affordable inputs, finance, insurance and reliable markets.

THE ISSUES

The report’s $11 trillion estimate highlights the potential economic cost of climate shocks that extend beyond individual farms. When drought affects production, farmers may harvest less, while higher energy and fertiliser prices make it more expensive to grow, process and transport food. These pressures can eventually reach consumers through higher food prices and reduced availability.

The problem is particularly difficult for small-scale farmers because they often have limited financial resources to absorb unexpected costs. A farmer who cannot afford fertiliser or irrigation may produce less, while one who lacks storage or reliable buyers may be forced to sell quickly at unfavourable prices. Access to credit or insurance alone may not solve these problems if the farmer cannot obtain inputs or reach a profitable market.

This explains why IFAD is advocating a combination of interventions. Agricultural inputs help farmers maintain production, market access allows them to earn from their harvests, while finance and insurance provide resources to invest and recover when conditions deteriorate.

The distinction matters for countries such as Nigeria, where food production is exposed to weather conditions and rising costs of agricultural inputs, energy and transportation. Support that focuses only on increasing farm output may deliver limited benefits if farmers cannot afford to produce, preserve their harvests or sell at prices that cover their costs.

The examples from Kenya, Bangladesh and Türkiye also suggest that agricultural resilience is not simply about introducing new technology. Solar irrigation, improved farming practices, credit and storage facilities become more useful when farmers can access them as part of a wider support system.

WHAT’S BEING SAID

“Resilience is not built by investing in single interventions, but by connecting investments in inputs, markets and finance so that gains in one area are not lost in another.” – Alvaro Lario, President of IFAD.

“Preparedness means acting before a crisis strikes. Farmers’ resilience is determined by the steps taken beforehand: access to water, affordable inputs, finance and insurance and reliable links to markets.” – Ibrahim Yumakli, Türkiye’s Minister of Agriculture and Forestry.

WHAT’S NEXT

IFAD is calling for governments, development institutions and other investors to prioritise coordinated agricultural investments rather than isolated projects. The approach places emphasis on preparing farmers before climate and economic shocks occur, instead of relying mainly on emergency support after losses have been recorded.

BOTTOM LINE

El Niño and other overlapping shocks could impose substantial costs on the global economy and threaten food security. IFAD’s central argument is that protecting farmers requires more than providing seeds, fertiliser or credit separately. Production support, access to markets and financial protection must work together to help rural communities withstand disruptions.