Over the past few years, agriculture has gone through the same shocks as the rest of the economy, from COVID to inflation, wars, and higher interest rates. Yet in each of these periods, when pressure builds, the sector is among the first to receive government support. 

The economic effects of the war in the Middle East and the Strait of Hormuz blockade were almost immediately visible across European markets. Energy prices have increased, supply issues continue despite ceasefire talk, and volatility is expected to persist for an extended period of time. 

In this context, the concern that rising input costs are putting pressure on agriculture is justified, especially in the short term. What receives less attention is how the sector can adjust beyond the initial impact, in ways that other areas of the economy cannot. 

So far, governments in Latvia, Lithuania, and Romania have all moved in a similar direction, reducing diesel excise and maintaining or extending support schemes for farmers. In Poland, fuel tax relief has been added to an existing agricultural diesel refund mechanism.  

These measures point to a consistent pattern: when production costs rise sharply, intervention follows quickly, absorbing part of the shock before it fully reaches the agriculture sector. 

There is also a market-side positive. Global agricultural prices have been moving up: in the latest FAO data, the food price index rose 2.4% month-on-month, with cereals up 1.5%, wheat up 4.3%, vegetable oils up 5.1%, and sugar up 7.2%. For farmers, that can support revenues, especially in grain and oilseed segments.  

At the same time, the broader economic situation is becoming more difficult for consumers. Higher energy costs are pushing inflation up again, slowing growth and adding more pressure on household budgets. That matters because lower-income households feel food and fuel inflation first and hardest.  

There are also fiscal concerns to acknowledge. Governments may continue to provide subsidies and temporary relief, but this comes at a steep cost in the context of high interest rates. As borrowing costs stay up, there is limited room for sustained intervention. And if inflation doesn’t cool off, interest rates may remain high for longer or even move up again. 

“From our perspective, there is a clear contrast between agriculture and other economic sectors, and that is precisely the reason LANDE focuses on agricultural financing. Consumers may face more pressure from inflation, higher living costs, and tighter credit conditions. Agriculture is of course not immune, but it is in a different position: it benefits from stronger commodity pricing, faster policy support, and its strategic role in European food security. That does not remove risk, but it does help explain why it remains one of the more resilient areas of the economy,” said LANDE CEO Nikita Goncars. 

Overall, the current environment points to a more nuanced picture. Agriculture remains exposed to volatility, but it benefits from structural buffers that reduce the impact of these shocks. In a context shaped by energy uncertainty and growing inflation, those advantages become increasingly relevant.