Cause and Effect | Climate crisis drives surge in food prices

Climate extremes intensify inflation risks and the Global South faces disproportionate impact. Here's why

Retail prices in India grew 7.44% in July, a sharp 2.57 percentage point jump from June. The exact metric is known as the Consumer Price Index (CPI), which includes a basket of goods and services so drawn up that it reflects the consumption of the average Indian. Higher this number, the more households have to spend.

A person at a vegetable market in Budapest. Credit: AFP

The reason for this short macroeconomics recap in a column about climate change is that what drove the rise in CPI was skyrocketing vegetable prices (they surged a whopping 37% compared to the year-ago period). And skyrocketing vegetable prices are, surprise, surprise, driven greatly by the climate crisis.

The story is perhaps best told by the headline-grabbing trends in tomato prices. On Wednesday, the local variety of the kitchen staple was selling at anything between ₹150 to ₹190 a kilo on grocery delivery apps in Delhi.

July is anyway an expensive season for tomatoes as it falls between harvests. But this year, wild weather swings – heatwaves and then unseasonal rains – created one of the worst shortages.

In as recent as May, farmers in several states were seen throwing away tomatoes as prices crashed to a mere ₹1.5 a kilo. Credit: ANI

It was as recent as in May when farmers in states like Maharashtra were seen throwing away the crop as prices crashed to a mere ₹1.5 a kilo, which meant that it was more expensive for them to lug them back to their fields than just dump them by the roadside.

And this fruit-vegetable isn't alone.

In the CPI index, tomatoes logged a 201% increase. As many as 15 out of the 22 items in the vegetables category of the index logged double digit growth.

July saw highest monthly inflation in 15 months

Apart from the burden it places on farmers, and the upheaval it is causing in Indian kitchens, the situation in markets also reveals a supply chain crisis that will only be more acute as the climate crisis deepens.

Put simply, the tomato example shows there was no way to create a buffer from a bumper harvest to meet demands when fresh farm supplies are disrupted.

The concept is not far-fetched. The country already does it with water. Every year, monsoon rains swell rivers, which are then dammed at various locations. As rains recede and the volume in the source reduces, the dams open gates, making up for the lack of water.

Yes, long-term storage of vegetables is tricky and replete with logistical issues. But maybe it is time to look at the climate adaptability of the farming sector?

If cows can be engineered to belch less methane, surely tomatoes can be stored for rainy days (both economical and meteorological).

Cows are known to emit methane, responsible for nearly 45% of the warming, both through their burps and their manure. Credit: Shutterstock

India isn't alone in the crisis

In 2022, the United States incurred over $2 billion in losses due to 20 climate-related extreme weather events. Lumber, cotton, tomatoes, wheat and energy were all affected by these events.

The price of food soared over 24% in Nigeria and 62.7% in Egypt in the last year.

Last May, Malaysia restricted its export of chicken products as hens tend to produce fewer eggs in extreme heat.

India, the world’s second largest producer of wheat, also banned the export of the crop after a spring heatwave slashed yields.

India imposed a ban on export of wheat after a spring heatwave slashed yields last year. Credit: Sanjeev Kumar/HT Archive

The high temperatures aggravated supply chain disruptions brought in by Covid-19, and then the Russia-Ukraine war. Ukraine, a major producer of vital crops such as wheat, corn and sunflower, was virtually cut off from the global markets.

Last summer’s heatwave in Europe caused a price rise magnifying inflation sparked by the Ukraine war.

It raised food inflation on the continent by 0.67 percentage points. The numbers after this year's devastation are awaited.

According to a report by the European Central Bank and the Potsdam Institute for Climate Impact Research published in May this year, the same conditions will be amplified by 50% in 2035 under current projections for weather extremes a decade from now.

The price (rise) of climate change

Without adaptation and mitigation efforts, the climate crisis could add one percentage point to global inflation every year between now and 2035, the report said, reserving the worst effects for food prices: over a 3% annual rise.

“The heat extremes of the 2022 summer in Europe is a prominent example in which combined heat and drought had widespread impacts on agricultural and economic activity,” the report said. “Future climate change will amplify the magnitude of such heat extremes, thereby also amplifying their potential impacts on inflation.”

As major rivers dried up last year, the ability of shipping companies to move goods around the continent was also hit, the report said. The agricultural industry came to an abrupt halt, as heat waves caused the output of staple crops including maize, sunflower and soybean to plunge nearly 9%.

Combined with projections from climate models, the researchers concluded that increasing temperatures have "non-linear, persistent impacts" on inflation in countries across different income categories. In other words, impacts can be disproportionately higher than the rise in temperature.

While it's a worldwide phenomenon, the largest impacts likely will be felt in the Global South, specifically Africa and South America, the researchers said.

“We find that the inflation response to average monthly temperature increases is non-linear. That means inflation goes up when temperatures rise, and it does so most strongly in summer and in hot regions at lower latitudes, for example, the global south,” Maximilian Kotz, scientist at the Potsdam Institute for Climate Impact Research PIK and lead author of the report said, in a statement.

The largest impacts on food security due to climate crisis likely will be felt in the Global South, specifically Africa and South America. Credit: Shutterstock

Remember the warnings?

This is precisely what was meant when the Intergovernmental Panel on Climate Change (IPCC) in its fifth assessment report in 2014 said climate change (it was yet to attain the crisis status) intensifies risks to food security for most vulnerable countries and populations.

It identified four of eight key risks induced by climate change as having direct consequences for food security:

• Loss of rural livelihoods and income

• Loss of marine and coastal ecosystems, and livelihoods

• Loss of terrestrial and inland water ecosystems, and livelihoods

• Food insecurity and breakdown of food systems

The IPCC has also warned that if the Paris Agreement's goal of limiting temperature rise to 1.5°C is not met, around 8% of the world’s farmland will become unsuitable for agriculture.

There may be hope still

The world could reduce impacts by adaptation and innovation (although various summits have been unsuccessful in agreeing on the terms), cut emissions (GHG emissions in the European Union fell by nearly 3% in the first quarter of 2023), devise market-driven policies to reduce emissions (more questionable mitigation) and strengthen economies (IMF has projected a 1.3% slowdown in advanced economies in 2023).

The International Panel of Experts on Sustainable Food Systems (IPES) last year suggested not only cutting emissions but also tackling commodity speculation, giving debt relief, cutting reliance on chemical fertilisers, reshaping trade and shoring up national grain reserves.

Or the world will find itself "sleepwalking into the catastrophic and systematic food crises of the future", it noted.

Steps that can help, just like the warnings that were issued, have been spelt out. To follow it is up to us and our policymakers.