Geopolitical tensions and protectionist policies have been exacerbating inflation globally, according to Olam Agri
The world is facing “food wars” as geopolitical tensions have triggered a rise of protectionism amid concerns about waning supplies, according to one of the largest global agricultural commodity traders, Olam Agri, as cited by the Financial Times on Wednesday.
The Singapore-based trading house is part of the wider Olam Group, which operates in more than 60 countries and supplies food and industrial raw materials to 22,000 customers worldwide.
“We have fought many wars over oil. We will fight bigger wars over food and water,” Olam Agri’s chief executive Sunny Verghese was quoted as saying at the Redburn Atlantic and Rothschild consumer conference last week.
The CEO warned that trade barriers imposed by governments seeking to prop up domestic food stocks had exacerbated food inflation.
According to the report, food prices started to climb in the wake of the pandemic and soared after the escalation of the Ukraine conflict and Western sanctions against Russia. The restrictions have resulted in some exports of grain and fertilizers being blocked, deepening food insecurity in poorer countries and exacerbating the cost-of-living crisis.
At the same time, big agricultural commodity traders reaped record profits in 2022, Verghese pointed out.
According to the CEO, the elevated food price inflation was in part the result of government intervention as wealthier countries stockpiled surpluses of strategic commodities which had “created an exaggerated demand-supply imbalance.”
“India, China, everybody has got buffer stocks,” Verghese said, adding: “That is only exacerbating the global problem.”
Climate change, which has hampered agricultural production globally, has also led to the rise of protectionism worldwide, Verghese argued. He mentioned Indonesia banning palm oil exports in 2022 to protect the local market and India imposing export restrictions on certain types of rice last year in an effort to curb rising domestic prices.
“You’re going to see more and more of that,” Verghese said.
He called on the gathering of consumer industry executives, which included the heads of Coca-Cola and Associated British Foods, to “wake up” and take more action on climate change.
UN human rights chief Volker Turk warned earlier that the world is advancing toward a catastrophic future where tens of millions of people will be at risk of famine unless climate change is adequately addressed. Extreme weather events are having a significant negative impact on crops, herds, and ecosystems, prompting further concerns about global food availability, he said.
