Agricultural Law 2026

Agribusiness at the Crossroads: Conflicts, Trade Realignments and New Frontiers in a Post-VUCA World

Challenges for agribusiness worldwide

For decades, the VUCA framework – an acronym for Volatility, Uncertainty, Complexity and Ambiguity, coined by the U.S. Army War College in the aftermath of the Cold War – served as the dominant conceptual lens through which strategists, policymakers and business leaders mapped the challenges of an unpredictable world. It was a useful shorthand: it captured the sense that the future had become harder to read, that cause and effect were increasingly difficult to trace, and that the rules governing markets, geopolitics and technology were in constant flux.

For much of the first two decades of the 21st century, agribusiness operated in a world that was, in essence, a VUCA world – one characterised by commodity price cycles, climate variability, shifting trade flows and the gradual tightening of environmental and food safety requirements. Challenging, certainly, but navigable by those with the right information, the right relationships and the right legal and financial structures.

That world no longer exists. It has been replaced by something qualitatively different: a condition that strategists and scholars have variously labelled BANI (Brittle, Anxious, Non-linear and Incomprehensible) or, in the terminology popularised by economist Klaus Schwab of the World Economic Forum, a “polycrisis” – a state in which multiple systemic shocks occur simultaneously, interact with each other in unpredictable ways, and produce consequences that are disproportionate to and qualitatively different from the sum of their individual parts.

In a polycrisis, it is not enough to understand each risk in isolation. The Strait of Hormuz closure drives up fertiliser prices at the precise moment when an emerging El Niño threatens crop yields. A landmark trade agreement between the EU and Mercosul enters into force at the exact moment when the EU bans Brazilian animal products over antimicrobial non-compliance. A tariff investigation launched in Washington reshapes export competitiveness for the very commodities that China has simultaneously committed to buying from a competing producer. Biofuel mandates create new demand precisely when traditional commodity markets are oversupplied. No single one of these dynamics, taken alone, would be exceptional. Taken together, arriving in the same compressed timeframe and interacting across supply chains, regulatory frameworks, financial markets and geopolitical alliances, they constitute exactly the kind of polycrisis environment that has rendered the old VUCA vocabulary insufficient.

The world of agribusiness has not merely become more complex. It has become more “polychromatic” – exhibiting multiple, simultaneous frequencies of disruption that interfere with one another in ways that make traditional risk management and scenario planning inadequate tools for navigating what lies ahead. In this global scenario, the world turns with concern to the issue of food security in its various fundamental aspects: availability, access, utilisation and stability, seeking greater food production at lower costs and ensuring access to it for an increasingly large portion of the world’s population.

However, this necessary effort faces an unexpected challenge: a process we can call “deglobalisation”, stemming from a growing wave of neoprotectionism, a crisis of multilateralism, leading to a weakening of the role of the World Trade Organization, hindering the global integration of food chains, and resulting in higher costs for end consumers while reducing producers’ profits. Neoprotectionism manifested itself in the form of non-tariff barriers, sometimes disguised as countries’ concerns about environmental issues.

Regulatory divergence in biotech approval timelines, food safety standards, and sustainability labelling requirements is creating an increasingly fragmented and costly compliance landscape for producers and exporters operating across multiple markets.

Despite these difficulties, the challenge of food security remains central as the global population continues to grow, and millions of people remain vulnerable.

With a particular focus on tropical agriculture, new technologies capable of increasing productivity are becoming indispensable. However, despite technological advances, the challenge of balancing sustainability with economic viability persists. Emerging environmental demands – especially in export-oriented production chains, with the creation of incentive mechanisms for producers, such as full traceability, less emission-intensive techniques, or qualification to operate in the carbon market – often impose high implementation costs and, without adequate market compensation, may only serve to create more pressure and lower income for producers while exacerbating regional inequalities.

Dealing with the challenges

Growing demand, climate shocks and shifting trade patterns are redefining how agribusiness scales. Around the world, producers aim to decouple output growth from land expansion by investing in efficiency, better inputs and data-driven agronomy. At the same time, trade disruptions and logistical bottlenecks have encouraged supply chain diversification, exposing concentration risks in products and destinations that affect resilience and the cost of capital.

Therefore, public policies are key for setting incentives and shaping risk allocation. Toolkits commonly include credit lines and guarantees, premium subsidies for insurance, fiscal signals and multi-year planning frameworks. Some jurisdictions prioritise productivity and infrastructure; others emphasise biodiversity, water stewardship or labour standards. Divergent definitions, supervisory mandates and approval processes can create friction for cross-border operators, making early policy mapping essential to bankability.

Land use, environmental permitting and water rights have moved from backdrop to decisive investment variables. Projects increasingly need to evidence compliance and traceability in order to meet domestic rules and the expectations of trade partners and financiers. Ownership, tenure and access restrictions – particularly for non-residents – can affect feasibility, security packages and valuation. Water governance adds another layer: in many jurisdictions, allocation, quality and scarcity risks directly influence project design, operating costs and long-term resilience.

ESG considerations now shape market access and the cost of capital. Buyers and lenders seek auditable policies that connect production to nature-based solutions, lower emissions and credible social safeguards. Taxonomies, disclosure regimes and sustainability-linked covenants increasingly condition pricing and eligibility for transactions, while climate-related trade requirements can create de facto entry barriers. Consistent ESG implementation tends to raise productivity and open premium markets, provided targets, metrics and monitoring are transparent and verifiable.

Outlook

The agribusiness sector will still be under great pressure, from the increasing world population growth, the climatic emergency or geopolitics. Some important movements will happen in the coming months and years that may shape the future, such as the entry into force of the European Union Deforestation Regulation, the EU-Mercosul Partnership Agreement, the consolidation (or not) of the BRICS alliance, China’s investments in Latin America, and Trump’s tariffs policy, among others. Several of these developments have already materialised and are reshaping the competitive landscape for agribusiness globally in ways that demand urgent attention from producers, investors and legal advisers alike.

The paragraphs below examine the principal drivers:

• the impact of armed conflicts on input costs and producer margins worldwide;
• the new geopolitical architecture of trade agreements and the tensions it generates between market opening and unilateral regulatory action;
• China’s structural pivot toward protein self-sufficiency and its consequences for global soybean flows; and
• the emerging opportunities in the biofuels and bioinputs economy as the energy transition reshapes demand for agricultural commodities.

The impact of armed conflicts

The US–Iran war, the Strait of Hormuz crisis and the compression of agricultural margins worldwide

The most immediate shock to the cost structure of global agribusiness in 2026 has come from an armed conflict far from most of the world’s principal farming regions. On 28 February 2026, the United States and Israel launched co-ordinated military operations against Iran, triggering a closure of the Strait of Hormuz that has constituted the largest disruption to global energy supply since the 1970s energy crisis. Brent crude surged from approximately USD70 per barrel to over USD110 at the peak, and the closure of the waterway – through which approximately 30% of globally traded fertilisers normally transit, alongside 20% of LNG and 27% of internationally traded oil – sent fertiliser prices sharply higher across every major agricultural producing region. FOB granular urea, a bellwether for nitrogen fertilisers, rose from USD400–490 per metric ton before the conflict to approximately USD700 per metric ton within weeks, and prices for diammonium phosphate (DAP) surged well above their February 2026 benchmark of USD622 per short ton.

The shock has been global in scope precisely because the Gulf region is so structurally dominant in fertiliser production: countries exposed to the disruption account for nearly 49% of global urea exports and approximately 30% of global ammonia exports. The consequences are most acute in countries that are both major agricultural producers and heavily import-dependent for fertilisers.

• Brazil is the world’s largest fertiliser user, at approximately 49 million metric tons in 2025, 85% of which is imported. The country saw urea import volumes fall by 33% in the initial weeks of the crisis, and faces the additional challenge that the conflict began at the precise moment when producers must purchase inputs for the 2026–27 planting cycle.
• India is one of the world’s largest rice and wheat producers, and faces exposure through import dependence and also through reduced domestic manufacturing capacity linked to disrupted LNG feedstocks.
• Sub-Saharan Africa, where over 90% of fertiliser is imported, faces the most acute vulnerability.
• In the United States, early surveys by the American Farm Bureau found that approximately 70% of farmers were unable to afford all the fertiliser they needed for the 2026 crop, and a coalition of 54 agricultural groups urged the administration to provide emergency market relief.

Critically, the 2026 episode has emerged in an environment of structurally compressed margins across producing regions: unlike the 2022 fertiliser shock, which coincided with a sharp rise in commodity prices that partially offset the cost increase, fertiliser price increases in 2026 have not been matched by commensurate commodity price gains, squeezing profitability across the global soybean, corn and wheat belts simultaneously. If the Strait of Hormuz remains disrupted through the fall of 2026, modelling by researchers at North Dakota State University suggests that global urea availability could tighten materially, with agricultural producing nations competing for reduced supply at elevated prices into the key forward-booking windows for the 2026–27 season.

The conflict has also confirmed a structural vulnerability that pre-existed it: the global fertiliser market lacks the kind of co-ordinated strategic reserves that exist for oil, making supply disruptions harder to manage and price spikes harder to moderate.

New geopolitical alignments: trade agreements, tariff threats and market access challenges

Beyond the immediate input cost shock from the Strait of Hormuz crisis, global agribusiness is navigating a new and more complex geopolitical architecture of trade relationships – one that combines unprecedented market-opening through bilateral and plurilateral agreements with the simultaneous erection of new regulatory, tariff and sanitary barriers by the same trading partners. The defining feature of this landscape is not that any single trade arrangement is exceptional, but that market access gains and market access losses are arriving simultaneously, creating a net outcome that is ambiguous and jurisdiction-specific.

The pattern is visible across the major agricultural trade relationships of the world. The US–Brazil bilateral relationship illustrates the tension between trade and geopolitics acutely. On 15 July 2025, at the direction of President Trump, the US Trade Representative (USTR) initiated an investigation under Section 301 of the Trade Act of 1974 into a broad range of Brazilian trade practices, covering:

• digital trade and electronic payment services;
• preferential tariff arrangements;
• anti-corruption enforcement;
• intellectual property protection;
• ethanol market access; and
• illegal deforestation.

After public hearings in September 2025 and formal consultations in April 2026, the USTR issued a determination on 1 June 2026, finding that several Brazilian practices are unreasonable and burden US commerce, and proposing a 25% additional duty on Brazilian-origin goods, with a statutory deadline of 15 July 2026 for responsive action. The proposed measure is in addition to a pre-existing 10% baseline tariff applied under Section 122 since February 2026. While many key agricultural export categories – including beef, coffee, orange juice, soybeans, corn and cocoa – appear in the proposed exemption annex, products such as fish, ethanol and a range of processed food items remain exposed, and the overall uncertainty creates significant risk premiums for exporters and their trading partners.

The EU–Mercosul front presents an equally paradoxical picture. The EU–Mercosul Partnership Agreement was signed on 17 January 2026 after more than two decades of negotiations, and provisionally entered into force on 1 May 2026, creating the world’s largest trading zone by population at approximately 700 million people and triggering tariff reductions across a broad range of goods. However, just two weeks after the agreement took effect, the European Commission voted unanimously to remove Brazil from the list of third countries authorised to export animal products to the EU – a decision taking effect on 3 September 2026, and covering beef, poultry meat, eggs, aquaculture products, honey and casings.

Brazil is the only Mercosur country affected; Argentina, Paraguay and Uruguay retain their authorised status. The stated ground is Brazil’s failure to demonstrate compliance with EU requirements on antimicrobial use throughout the full lifetime of the animals from which exported products originate – requirements that apply uniformly to all third-country suppliers regardless of their bilateral trade commitments. Brazil currently lacks a nationwide individual animal traceability system capable of verifying this requirement, with a fully operational system unlikely before 2032.

The case illustrates a dynamic that recurs across multiple regulatory frameworks: trade agreements open tariff gates while regulatory standards – on food safety, sustainability and labour – provide alternative mechanisms through which the same markets can be effectively closed. The EU’s Regulation on Deforestation-Free Products (EUDR) exemplifies this dynamic at a broader, multi-commodity level. Twice delayed (with mandatory compliance now set for 30 December 2026 for large and medium operators, and 30 June 2027 for micro and small operators), the EUDR requires exporters of cattle, cocoa, coffee, soy, palm oil, rubber and timber to demonstrate that their products were not produced on deforested land after 31 December 2020.

The regulation applies globally to all suppliers to the EU market, affecting producers in Latin America, Southeast Asia and Africa alike. Its benchmarking system, which classifies countries by deforestation risk, creates reputational and market access consequences that extend beyond the formal compliance requirements, and the compliance burden falls disproportionately on smallholder producers across all affected geographies.

Alongside these challenges, however, the same period has seen meaningful advances in trade integration. The EFTA–Mercosul Free Trade Agreement, concluded in July 2025 and signed in Rio de Janeiro in September 2025, creates a combined market of approximately 290 million people, eliminates or reduces tariffs on nearly 99% of trade value, and opens new channels across agriculture, services and investment. The Mercosul–Singapore Free Trade Agreement (the bloc’s first with a Southeast Asian economy) entered into force for Paraguay and Singapore on 1 February 2026, and for Uruguay on 1 March 2026, opening a gateway to the Asia-Pacific region across a bilateral goods trade of USD11.9 billion.

These agreements, alongside the EU–Mercosul deal, reflect a world in which trade integration is expanding its geographic scope – but in which the benefits of that integration are being conditioned, contested and sometimes immediately offset by unilateral regulatory or tariff action from the very same partners.

China’s pivot toward protein self-sufficiency and its consequences for global soybean markets

Perhaps the most structurally significant demand-side development reshaping global agricultural trade over the medium term is China’s sustained and accelerating effort to reduce its dependence on imported soybeans – a shift that carries systemic implications for the structure of global oilseed markets, the viability of export-oriented agricultural expansion, and the price assumptions embedded in land values and rural credit across the Southern Hemisphere.

China is currently the world’s largest soybean importer by a substantial margin, accounting for approximately 60% of global soybean imports and having absorbed a record 111.83 million metric tons in 2025. Its purchasing decisions are the single most important variable in global soybean price discovery. Two concurrent developments are now reshaping those decisions in ways that will be felt not only in Brazil and Argentina (together responsible for approximately 66% of global soybean exports), but across every market whose dynamics are linked to oilseed pricing, including livestock feed, vegetable oil and biodiesel.

• The first is a series of bilateral purchase commitments with the United States that redirect a material share of Chinese soybean imports away from South American suppliers. Following a summit between Presidents Trump and Xi in October 2025, China committed to purchase at least 12 million metric tons of US soybeans in the final two months of 2025, and at least 25 million metric tons annually in each of 2026, 2027 and 2028. A further expansion in May 2026 committed China to at least USD17 billion per year in US agricultural products across the same period, beyond the soybean volume commitments. The 25 million metric ton annual soybean target represents approximately 22% of China’s projected total imports, partially reversing the reorientation of Chinese sourcing that occurred during the 2025 trade war, when China directed record volumes to South American suppliers. South American soybean exports to China in 2026 are already projected to decline materially relative to 2025 peaks as a result.
• The second and more structurally durable development is China’s domestic food security strategy. The 2026–2030 Five-Year Agricultural Plan sets targets to increase total grain production from 700 to 715 million metric tons, with a stretch goal of 750 million tons, and places particular emphasis on reducing dependence on imported protein. The Ministry of Agriculture’s Three-Year Action Plan to Reduce Soybean Meal in Feed, launched in 2023, targets a reduction in the share of soybean meal in compound livestock feed from approximately 17% at its peak to 10% by 2030.

According to Goldman Sachs analysis published in December 2025, measures already implemented (including substitution of soybean meal with alternative protein sources and improvements in feed-conversion efficiency) reduced Chinese soybean demand by approximately 15 million metric tons between 2021 and 2024; Goldman projects a further reduction of up to 42 million metric tons between 2030 and 2035 through continued substitution and livestock genetic improvements.

A government-backed outlook released in April 2026 projects Chinese soybean imports to decline from 111.83 million metric tons in 2025 to 82.55 million metric tons by 2035 – a reduction of 26.2% that, if realised, would be the largest structural demand reduction in the history of globally traded oilseeds. The aggregate impact on global agricultural trade patterns would be profound: commodity prices, acreage allocation decisions and infrastructure investment models across South America, the United States and the Black Sea region have all been calibrated to the assumption of continuously expanding Chinese demand. A sustained structural decline would require a fundamental recalibration of those models, and the adjustment is unlikely to be smooth or linear.

Biofuels and bioinputs: the energy transition as a structural opportunity for agricultural commodity markets

Against the backdrop of compressed commodity prices, rising input costs and tightening market access in traditional destinations, the global energy transition is emerging as one of the most consequential structural opportunities for agricultural commodity markets in the coming decade.

The convergence of three major regulatory movements – the IMO’s Net-Zero Shipping Framework, the EU’s suite of decarbonisation mandates for transport, and the global expansion of sustainable aviation fuel requirements – is creating entirely new demand vectors for the very commodities most exposed to price pressure today: sugar, soybeans, vegetable oils and corn. These demand vectors are distinctive in being driven by regulatory mandates and energy security imperatives rather than discretionary consumption, making them structurally more durable and less cyclical than traditional commodity markets.

The International Maritime Organization approved a draft Net-Zero Shipping Framework at its MEPC 83 session in April 2025, setting targets to reduce the carbon intensity of international shipping by at least 40% by 2030 and achieve net-zero greenhouse gas emissions by or around 2050. The formal adoption vote was adjourned to October 2026, but major shipping companies have already committed to fleet decarbonisation programmes ahead of the formal regulatory trigger. The Framework’s greenhouse gas fuel intensity standard creates compliance incentives for biofuels – including biodiesel and hydrotreated vegetable oil (HVO) derived from soybean oil and other vegetable oils – as drop-in transitional fuels capable of reducing life cycle emissions without vessel modifications.

In Europe, the FuelEU Maritime regulation entered into force in January 2025, mandating a 2% reduction in the greenhouse gas intensity of fuel used by ships trading in European ports, scaling to 6% by 2030 and 80% by 2050; early evidence from the Port of Rotterdam shows biofuel blend volumes holding year-on-year in the first quarter of 2026 as conventional fuel volumes fell sharply. A complicating design feature for vegetable oil producers is that FuelEU Maritime bars crop-based biofuels from compliance eligibility for vessels trading in European waters, incentivising instead waste-derived feedstocks such as used cooking oil. This creates a bifurcated global demand picture: waste-derived feedstocks command a compliance premium in European maritime markets, while crop-based biofuels find growing demand in non-European shipping markets, domestic road transport mandates and aviation.

The aviation sector represents the most favourable structural opportunity. Global SAF mandates are accelerating – the EU’s ReFuelEU Aviation regulation, ICAO’s CORSIA programme and the US Clean Fuel Production Credit are collectively creating demand for a fuel that represented less than 0.5% of global aviation fuel consumption in 2026 but for which the International Air Transport Association projects a need for 500 million tonnes annually by 2050. The feedstock pathways most immediately scalable are HEFA (Hydroprocessed Esters and Fatty Acids), fed by vegetable oils and animal fats, and ATJ (Alcohol-to-Jet), derived from sugarcane, corn, and cellulosic ethanol. Countries with both significant biomass feedstock bases and established biofuels infrastructure – Brazil first among them, but also the United States, Argentina, Colombia, Indonesia and Malaysia – hold a structural comparative advantage in meeting this demand. At its 82nd Annual General Meeting in Rio de Janeiro in June 2026, IATA identified Brazil as having the potential to produce approximately 12 million tonnes of SAF by 2030 – five times estimated global production in 2026 – by leveraging its sugarcane ethanol base and soybean oil supply chains.

Alongside liquid biofuels, the bioinputs sector (encompassing biological nitrogen fixation, biostimulants, biopesticides and biofertilisers derived from microbial and plant-based sources) is emerging as a parallel strategic vector, made more urgent by the Strait of Hormuz crisis. As synthetic fertiliser prices spike and supply chains become geopolitically fragile, the substitution of chemical inputs with biological alternatives becomes both an agronomic necessity and a supply chain resilience imperative for producing regions worldwide.

The challenge for both vectors – biofuels and bioinputs – is to align the regulatory, certification and investment frameworks needed to deploy these technologies at the scale and speed that the energy transition and food security agendas require. That alignment is itself a legal and governance challenge, requiring the development of new contract structures, sustainability certification systems, carbon-credit mechanisms and project finance models that can bridge the gap between existing agricultural value chains and the new markets opening up through decarbonisation mandates.

The market will continue to reward issuers who evidence compliance, manage data well and align incentives across the chain – pairing innovation with legal clarity to support food security and climate goals.