Severe weather disruptions will amplify food security risks in Asia, potentially triggering civil unrest and political instability in vulnerable countries such as India, Indonesia and the Philippines, according to consultancy Verisk Maplecroft.
The warning comes as the war in Iran has already disrupted fuel and fertilizer supplies, both of which are key agricultural inputs. Now, weather extremes linked to a powerful El Niño are further threatening crops across the region.
Indonesia, the world’s biggest palm oil producer, is suffering from a rash of hard-to-control wildfires that have disrupted harvests. The monsoon rains that top rice exporter India relies on are running 15% below normal, and Thailand’s sugar harvest is set to sink.
The twin threats of war and weather are driving up food inflation — an established trigger for unrest, the risk consultancy said in a report released on Thursday.
Over half of countries that are at high- or very high-risk on Verisk Maplecroft’s Food Security Index also sit within the two highest categories of its predictive Civil Unrest Index. Those include India, as well as Bangladesh, the Philippines and Indonesia, where protests have already broken out in recent weeks.
“The data suggest if food price and availability pressures intensify, and governments are seen to respond ineffectively, unrest and political instability could emerge in these higher-risk markets,” the report said.
For conflict-stricken nations like Afghanistan and Myanmar, a food shock would raise the risk of a humanitarian catastrophe, it added. Thailand, highly reliant on imported energy and fertilizers, is also under growing pressure from debt-laden farmers ahead of the next planting season.
“The impacts are increasingly visible,” said Verisk Maplecroft. “In many key agriculture regions, planting and fertilization decisions were made during the peak of the disruption, meaning negative impacts may now be locked in even if the geopolitical situation improves in the coming months.”
Meanwhile, hedge funds see super El Niño as an opportunity. The head of ZAMS Asset Management, a former Balyasny Asset Management trader, said he’s expecting it to produce an “unusually alpha-rich environment,” while Moreton Capital Partners is targeting $500 million to bet on all the ways in which El Niño will upend food prices.
Photograph: The young and old palm oil tree plantation of PT Gunung Sejahtera Ibu Pertiwi, an unit of Astra Agro Lestari, at West Kotawaringin regency, Kalimantan, Indonesia, on Tuesday, Sept. 19, 2023; photo credit: Muhammad Fadli/Bloomberg
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