Food prices could surge as climate change and conflicts hit commodity chokepoints

28-Jun-2017 - Last updated on 29-Jun-2017 at 13:27 GMT

The authors offered the scenario of a hurricane comparable to the ferocity of Hurricane Katrina in 2005 shutting down US exports ©iStock

The price of key commodities like soy and wheat could surge unless the vulnerabilities at the world’s most important trade “chokepoints” are assessed and the risks mitigated.

That’s the stark warning from experts at the think tank Chatham House. In a new report, they claim governments have “underappreciated” and “woefully overlooked” the handful of key points in the global food trade system where “things could go wrong”.

The team identified 14 chokepoints critical to global food security. Of these, eight are maritime chokepoints, like the Panama Canal and Suez Canal, three are inland and three are coastal.

In Brazil, for example, four ports on the southeastern coastline are responsible for nearly a quarter of global soybean exports. Meanwhile, the Turkish Straits are critical for wheat, with a fifth of global exports passing through each year.

Bottlenecks at breaking point

Dependency on these so-called chokepoints is growing – and will continue to do so as population growth, dietary change, a slowdown in crop yields and increasing resource stresses on production force more countries to import more food. Indeed, between 2000 and 2015, the volumes of agricultural commodities traded on international markets increased by 127% to 2.2 billion tonnes.

At the same time, these bottlenecks in global trade are increasingly exposed to three broad categories of disruption: political and institutional; conflict and security; and weather and climate.

“A serious disruption at one or more of these chokepoints could conceivably lead to supply shortfalls and price spikes,” the authors warned in their report, Chokepoints and vulnerabilities in global food trade.

Minor disruptions are already common – all but one of the 14 critical chokepoints has been subject to closure or restrictions in the past 15 years. These won’t trigger crises but can add to delays, spoilage and transport costs, thereby contributing to higher prices and increased volatility, the authors explained.

The 2007-08 food crisis, export bans on wheat from the Black Sea countries that contributed in part to the Arab Spring in 2010-11, and the recent closure of overland routes that carry 40% of Qatar’s food imports provide a “flavour” of what’s to come, said Laura Wellesley, one of the report’s authors.

But as global trade increases and climate change takes hold, the risk of severe disruption will only intensify – and that could have devastating knock-on effects for global food security.

Hurricane hurdle

The authors offered the following hypothetical scenario: if a hurricane comparable to the ferocity of Hurricane Katrina in 2005 were to shut down US exports from the Gulf of Mexico at the same time as extreme rainfall rendered Brazil’s roads impassable (as in 2013), up to 50% of global soybean exports could be affected. Throw in a heatwave in the Black Sea area (like in 2010) and, respectively, 41% and 18% of global maize and wheat exports could also be halted or delayed.

“The oil industry has been mapping this sort of risk for years but it has been woefully overlooked in discussions of food security,” Wellesley said.

Wellesley and her team said the lack of cooperative approaches for dealing with food chokepoint risk is “troubling” and also “raises the prospect of uncoordinated, unilateral responses as states scramble to secure supply in the event of a major disruption, deepening the crisis as they do so”.

Governments needed to act immediately, by diversifying production and stocks, strengthening global rules and cooperation, and investing in climate resilient infrastructure, Wellesley said. “Climate change is going to make things worse. We need a new, collaborative approach to mapping and mitigating the growing threat we all face,” she added.