Amid climate change and rising trade barriers, the risk of “food wars” is growing, said Olam Agri CEO Sunny Varghese. Joan Cross/NurPhoto via Getty Images
Olam Agri CEO warns food wars will rise amid trade barriers and climate risks.
Food inflation is already rising due to a widening imbalance between supply and demand.
Protectionism is on the rise as countries seek to protect their domestic markets.
Trade barriers and the climate crisis are tightening supplies and causing “food wars” to threaten global stability, the head of trading company Olam Agri has warned.
In comments first reported by the Financial Times, Chief Executive Sunny Varghese suggested that tighter trade restrictions were already fuelling food inflation and creating a disproportionate imbalance between demand and supply.
“We've fought many wars over oil. We're going to fight even bigger wars over food and water,” he said at the Redburn Atlantic/Rothschild consumer conference last week.
The CEO disagreed, blaming agricultural traders for rising food prices after Russia's invasion of Ukraine in 2022. Instead, a surge in non-tariff trade barriers was the more likely culprit, with 1,266 restrictive measures jumping that year.
As trade in goods became tougher, demand rose in wealthier economies, leading to a focus on creating surplus inventory.
The media reported that rising prices have not only exacerbated the cost of living crisis in some areas, but that the growing food shortages since the COVID-19 pandemic are creating anxiety in poor areas.
At the same time, rising temperatures have exacerbated challenges to agricultural production, causing prices of many commodities, including cocoa, coffee and sugar, to soar.
This, too, is leading governments around the world to turn to protectionism to protect their domestic markets, such as Indonesia's palm oil export ban and India's rice export restrictions, Verghese said.
“That was just wrong,” he said. “You're going to see more and more of this.”
In the face of climate risks, the trader urged the industry to take serious measures, and he argued that a carbon tax would be the right policy for governments.
Read the original article on Business Insider
