El Nino threatens new increases in food prices

Will hit production in parts of South Asia and Central America

India's decision to ban rice exports sparked intense concern in the US, leading to frenzied rice buying, sending rice prices to record highs

Financial Times, CNN

Strong inflationary pressures are expected to be exerted by the El Nino weather phenomenon on food prices, which have already risen after India's decision to ban all rice exports and Russia's withdrawal from the Black Sea Grains Agreement . Another factor that worsens the picture was the fact that Russia bombed terminals for Ukraine's grain exports. As a related CNN report emphasizes, the combination of these negative factors is expected to accelerate inflation in food prices and particularly in emerging markets.

According to a related report by the Financial Times, from September the natural temperature variation in the Pacific Ocean, known as the El Niño phenomenon, is expected to cause extremely high temperatures in areas of South Asia and Central America, as well as rainfall in the Andes. Usually this phenomenon disrupts the course of crops and will probably affect global food production, leading to a rise in prices. It was preceded by heavy rains, which forced India to ban all rice exports except the famous basmati rice variety, causing turmoil in the global market. According to data from the United Nations' Food and Agriculture Organization, India's decision sparked intense concern in the US, leading to frenzied buying of rice, which in turn sent rice prices soaring to their highest levels in 12 years. Although basmati rice is the most famous variety that India produces, other varieties account for 25% of its exports, and their ban threatens billions of people with starvation. At least three billion people rely on rice as a staple food, and India accounts for about 40% of its global exports.

Speaking to CNN, Arif Hussain, a senior economist at the United Nations Food Program, pointed out that “the problem is that it's not just a type of food.” As he explains, “rice, grains and corn make up most of the diet of poor people around the world”. In addition, the economist in question emphasized that “the ban comes at a time when countries are struggling to deal with their unsustainable debts, food price inflation and currency devaluations, and this is a problem for everyone.” The effects are already visible in poor countries. According to local media reports, Nepal has already seen large increases in food prices since India announced the ban. At the same time, Vietnam's customs authorities report that in recent weeks, rice prices have soared to the highest levels in the last 10 years or more. Even in Thailand, the world's second largest rice exporter after India, the Association of Rice Exporters reports rising rice prices. Many countries in the wider region such as Singapore, Indonesia and the Philippines have appealed to New Delhi to lift the ban and resume rice exports. The same appeal has been addressed to the leadership of the IMF by the IMF, with the Fund's leading economist, Pierre Olivier Gurinhas, anticipating that the controversial decision “will increase to the maximum” the risk of inflation in food prices. Many economists warn, after all, that the ban may be the starting point for similar moves by other exporting countries that compete with India. It will also be extremely painful for India's farmers, who account for nearly half of its workforce. It is expected to be equally destructive, also, for the houses that have undertaken the sales and exports of rice and are now left with huge stocks of the species.

Source: www.kathimerini.com.cy

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