Weather Is Still the Wild Card in Global Food Supply
(Bloomberg) -- The coronavirus pandemic is putting untold pressure on the supply chains that produce and transport the world’s food. Yet there’s one vital factor even harder to control than panic buying -- the weather.
A period of extreme weather that devastates harvests could force countries to deploy more protectionist food policies, creating a ripple effect through global trade. Concerns over access to wheat and other staples have already led nations including Kazakhstan and Russia to introduce export restrictions, sparking fears of a global food crisis not seen for a decade. So far the curbs have been limited to a handful of nations imposing short-term measures.
There is cause for concern. Drier weather has affected key growing regions in the Black Sea, Argentina and across Europe. Behind the day-to-day weather concerns, global warming is playing an ever greater role in determining the strength of food supplies. The threat of extreme drought or torrential downpours only makes it more difficult to predict what will happen.
“Climate change is the elephant in the room in all these discussions,” said Tim Benton, research director in emerging risks at Chatham House in London and a food security expert. “You can easily imagine some nasty weather happening somewhere around the world which will compound these issues. So let’s just pray for good weather.”
For now, supplies are ample and nobody’s talking about any harvest failures. Yet the threat remains that the situation could quickly shift from being comfortable to dire.
Those worries are starting to surface as a prolonged dry period in top wheat producer Russia is threatening to damage this year’s crop. Meanwhile in Romania, a severe drought is eroding expectations for a bigger crop this year.
In neighboring Ukraine, water reserves are at their lowest in six years, while France and other grain producers in Europe also face drought this year. Adding to that, dryness in Argentina is increasing pressure on crop exporters grappling with the lowest water levels since 1989 on the Parana River.
The next three months are critical for wheat farming in the northern hemisphere, when the amount of moisture and temperatures matter for crop growth. Protectionist measures have resurfaced memories of food-price crises of 2008 and 2011, when soaring costs caused political and economic instability around the world. Several countries banned grain exports, worsening the situation.
Today, wheat supplies are still abundant thanks to last year’s bumper harvests. Consumers may be hoarding staples like flour and bread, but once the panic buying ends, the world will probably still have a huge stash of wheat, the International Grains Council said last month.
While global wheat reserves are projected to rise to an all-time high this season, not all the supplies are available for export, with about half of global stockpiles held in China, said Benjamin Bodart, director at CRM AgriCommodities in Newmarket, England.
“We simply cannot afford a drought this year,” he said.
Parts of the Atlantic, Pacific and Indian Oceans all hit the record books for warmth last month, according to the U.S. National Centers for Environmental Information. The high temperatures could offer clues on the ferocity of the Atlantic hurricane season, the eruption of wildfires from the Amazon region to Australia, and whether the record heat and severe thunderstorms raking the southern U.S. will continue.
©2020 Bloomberg L.P.