Op-ed by Jim Mellon, investor and executive chairman, Agronomics (pictured).
El Niño has returned to the Pacific, and the signs point to something historic.
Forecasters now believe there is a real chance this event will rank among the most powerful ever measured, in the company of 1997-98 and 2015-16, the two years that redefined what “hot” meant for a generation. When El Niño reaches that scale, it does not act alone. It layers on top of a planet already trending warmer, and the result is temperatures that break not just yearly records, but decades of them.
That is a sobering fact on its own. It becomes more sobering once you factor in the timing. Agricultural impacts from El Niño typically lag the underlying climate signal by six to twelve months, which means the real pressure on yields and prices is still ahead of us, building through the rest of 2026 and into 2027.
And this cycle is not landing on a stable baseline. It is landing on the warmest global temperatures on record, at the same time as a live fertiliser crunch caused by the conflict around the Strait of Hormuz, which has pushed input costs for farmers sharply higher in recent months.
Two shocks, arriving together, on top of a system that was already stretched.
Why this is different from a normal bad season
There is a temptation to treat El Niño as a passing weather story: a dry spell here, a flood there, and the prices will recover once the rains return. That understates the risk. Farmers cannot simply replant their way out of a bad season. Soil degrades, herds are culled and take years to rebuild, and perennial crops in particular carry damage forward rather than resetting.
Cocoa is the clearest illustration. After a run of deficits driven by ageing trees, disease and erratic West African rainfall, the market has only recently rebalanced into a fragile surplus. Analysts covering the sector are explicit that this recovery depends on weather holding, and that the underlying structural problems, low farmer incomes, thin reinvestment in irrigation, remain unresolved.
Coffee shows a similar pattern, with Brazil’s crop outlook now a central swing factor for the whole market. These are not one-off blips that correct themselves. They are structural deficits that a strong El Niño can reopen at speed, and once reopened, take years of favourable seasons to close again.
Beef tells the same story from a different angle. Years of drought have pushed the U.S. cattle herd to its smallest size in generations, and roughly three-quarters of the beef cow herd is currently sitting in drought conditions, far above the long-term average. Ranchers have not been able to rebuild, since holding back heifers to grow the herd requires feed and pasture that the drought has not allowed.
When weather and geopolitics start feeding off each other
A weather shock on its own is hard enough to plan for. A weather shock arriving alongside a geopolitically driven fertiliser crunch is a different order of problem, because farmers lose the ability to compensate.
Historically, a poor season could be partly offset by increasing fertiliser use to rebuild soil fertility and yields the following year, or by shifting land into a more resilient crop. Both of those levers are harder to pull when input costs are already elevated and supply chains for fertiliser and energy are themselves under strain.
This is the pattern that should concern anyone in food manufacturing and retail: climate risk and geopolitical risk are no longer separate line items to be managed independently. They compound. And a food system built almost entirely on open fields, rainfall and stable input markets has very little insulation against that compounding effect.
Building outside the cycle
The response cannot only be to absorb the shock and wait for it to pass, because the next one is already visible on the horizon. What is needed is production that sits outside the climate and geopolitical risk cycle rather than merely hedged against it.
This is the case for clean food: proteins, fats and other key ingredients grown in bioreactors rather than on exposed farmland. Instead of a crop absorbing sunlight over a season, microbes or animal cells are fed a nutrient broth in a controlled tank, multiplying into the target ingredient in days rather than months. The approach spans a few distinct methods now moving toward commercial scale.
Cultivated meat grows real animal cells directly, with the UK’s Meatly already selling cultivated chicken for pet food and the Food Standards Agency working toward approving cultivated products for human consumption within the next couple of years. Precision fermentation, meanwhile, uses microbes to produce specific fats and proteins, while other producers are fermenting cocoa flavour compounds from feedstocks like oats and beet sugar rather than cacao beans at all.
What unites all of these is that none of them depend on this season’s rainfall, this year’s fertiliser price, or the state of a shipping lane thousands of miles away. In the UK, Clean Food Group’s move to scale production of CleanOil, a palm oil alternative made without tropical land or long supply chains, is a practical example of what that insulation looks like in commercial form.
None of this argues for sidelining traditional farming; British agriculture remains essential, and the goal is to complement it, freeing land and farmers to focus on higher-value, more resilient practices rather than absorbing every shock at the root.
But the message from this El Niño cycle is unambiguous. A system dependent entirely on fields and open trade routes is not equipped for a world where climate and geopolitical shocks increasingly arrive together. Those building production capacity outside that cycle now will be the ones with supply, and pricing stability, when the next one hits.
Learn more about Agronomics at www.agronomics.im.
