El Niño Threatens Food Prices as Experts Warn of a Possible Food Crisis
A strengthening El Niño is doing more than just impacting the weather patterns. The climate phase is also forecast to drive prices up on coffee, palm oil, and chocolate. Here is what you need to know if you frequently purchase these products.
Powerful El Niño Expected to Exacerbate Shaky Food Supply and High Prices
U.S. consumers are being warned to brace for steeper prices on chocolate and coffee as the record-breaking El Niño becomes more entrenched. The stubborn climate phase is predicted to amplify the already worrisome supply chain issues around the world, leading to higher prices on food products produced in the tropics.
The developing countries that grow these products are forecast to experience the greatest impacts, according to Christopher Barrett, who teaches food and agricultural economics at Cornell University. These nations are less equipped to adapt to extreme weather and shortages in agricultural necessities such as fertilizers.
Supply chain issues are already a concern as tensions in the Middle East and the Black Sea continue. “We’re not in normal times,” Barrett said. The unpredictability of the geopolitical tensions makes El Niño more likely to disrupt the world's food supply chain, with the biggest impacts predicted in eastern and southern Africa
Nations known for their coffee and palm oil products are especially vulnerable to the impacts of El Niño. For instance, Brazil and Vietnam are likely to see noticeable changes in precipitation patterns during times when El Niño is in charge. These changes could significantly disrupt the production of these two goods.
While it may not seem as if palm oil itself is important, this product is a common ingredient in many types of foods, as well as products such as cosmetics. Indonesia is in the middle of a drought and wildfire spread that is being blamed on El Niño. As a major producer of palm oil, the trickle-down effects of this ingredient shortage could be felt around the world.
Impacts to the U.S. Specifically
The good news for the U.S. is that experts do not predict any food shortages due to El Niño. This is because the U.S. enjoys sufficient agricultural production that can normally withstand extreme weather. However, the shortages in other parts of the world could lead to higher prices for the U.S.
The main question now is how much El Niño will further elevate food prices on a global scale. For instance, the oil supply issues connected to the ongoing conflict in the Middle East have drastically boosted prices of gasoline, diesel fuel, and fertilizers. Compounding this issue are the trade barriers and tariffs rolled out by the White House.
Barrett explains that trade can be used as a "release valve" when El Niño is driving the weather patterns. The current trade barriers could hinder the ability of many countries to absorb the higher costs related to El Niño's extreme weather.
It is also important to understand that the impacts of El Niño will not be instantaneous. It is normal for there to be a lag between the weather and the impact on food prices and the supply chain. Nelson Villoria, an agricultural economist at Kansas State University, explained that "Tropical commodities such as palm oil, coconut oil, coffee and fishmeal, show the largest increases." Prices on goods such as vegetable oils and coffee could remain high for up to a year after El Niño fades away.
Some types of cereal crops may also be impacted by El Niño across large portions of Africa. While this problem is not as pronounced in developed nations, the maize crops in southern and eastern portions of Africa are extremely sensitive to the impacts of weather. Experts predict that prices may jump as much as 20% in these regions.
Barrett summarizes the problem by detailing that “Food prices almost always go up a bit with El Niño events, and they go up more the more serious the El Niño and the worse the timing." Because this is likely to be one of the most powerful El Niño events on record, it is only going to amplify the already shaky global economy.
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