Energy Crisis as a Cause of Agricultural Crisis

Pejanović, Vladimir and Pejanović, Radovan and Zejak, Dejan and Radović, Gordana (2026) Energy Crisis as a Cause of Agricultural Crisis. In: 7th International Scientific Conference "Challenges of Modern Economy and Society Through the Prism of Green Economy and Sustainable Development" – CESGED 2026. Faculty of Economics and Engineering Management – FIMEK ; Educational and Business Center for Development of Human Resources, Management and Sustainable Development, Novi Sad, Serbia, pp. 110-117. ISBN 978-86-82408-38-3

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Abstract

The current energy crisis is the main cause, alongside climate change, of the agricultural crisis. The authors analyze the negative effects of the energy crisis on the agricultural sector. This situation creates a vicious cycle: the energy crisis increases production costs in agribusiness, which leads to rising food prices. This directly affects food demand, which decreases, resulting in the unprofitability of agricultural production and disincentives for engaging in this activity. On the other hand, rising food prices contribute to increased inflation, which has a devastating effect on the population's standard of living. Under these conditions, capital in the financial markets becomes more expensive, leading to a lack of investment in agroindustry and agribusiness. Agricultural production is a highly energy-intensive activity that depends on stable energy prices in several key ways: fuel and mechanization (agricultural work requires fuel for tractors, combines, and other machinery); fertilizers (the production of artificial fertilizers is very energy-intensive, especially nitrogen fertilizers, which require natural gas as a primary raw material); transport and logistics (from field to table, agricultural products pass through complex supply chains that depend on transport prices, which in turn depend on energy costs). Energy security is primarily a global issue with specific challenges. As a non-EU member country, Serbia has limited options for diversifying energy sources and often depends on importing energy at market prices. This problem particularly affects rural areas that depend on agriculture as their primary economic activity. Therefore, the relation between the energy and agricultural crisis is not only economic but also social, as it affects food security and the population's standard of living. A long-term solution requires a systemic approach that includes diversification of energy sources, increased efficiency, and strengthening the resilience of agricultural systems to energy shocks.

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