Heat, war and export restrictions: Global food threats are on the rise

A farmer sows rice seedlings in a waterlogged paddy field in Bhivpuri, near Mumbai.

As extreme temperatures ravage farms from the US to China, crop harvesting, fruit production and dairy production are all coming under pressure. This is one of the threats to extreme weather food supplies that is once again on the rise around the world.

This week, top rice exporter India banned some shipments of the commodity – a staple food for nearly half the world’s population – in a bid to keep domestic prices in check. Russia abandoned the agreement that allowed Ukrainian grain to flow safely into the Black Sea.

In addition, the recent arrival of El Nino weather pattern can cause more damage to agriculture.

All of this is rekindling concerns about food security and prices, raising the risk that runaway inflation will remain on supermarket shelves for a long time to come. This will come as a fresh blow to consumers, who were starting to see some better news after prolonged pressure on household budgets.

“We are all still struggling under the inflation regime,” said Tim Benton, food safety expert at Chatham House in London. “And although inflation is coming down, that doesn’t mean that prices are going down. It just means that they are going up more slowly.”

The extreme heat that has gripped large parts of Asia, Europe and North America is the latest challenge in a difficult year for farmers. They have had to deal with the ravages of extreme weather including prolonged droughts, heavy rains and floods.

Right now, it’s so hot in southern Europe that cows are giving less milk and tomatoes are going to waste. After battling with the drought, the grain yield will also be very low.

In Asia, yields from China’s rice fields are at risk, and US conditions for growing crops in June were the worst in more than three decades, before some relief from rain in the Midwest. Rice prices in Asia recently hit a two-year high as importers built up stocks.

While the full extent of the damage will depend on how long the adverse conditions persist, there are already clear signs of destruction of fruit and vegetables in southern Europe, which supply much of the continent.

In Sicily, some tomatoes have ominous-looking dark rings, the result of so-called flower tip rot, which occurs when plants are deficient in calcium due to extreme weather.

“They’re like burnt to the bottom,” said Paddy Plunkett, head of global sourcing for importer Natura. To whom a producer had sent a picture. “I’ve never seen it before.”

Across Italy, weather-related damage to agriculture will exceed last year’s losses of 6 billion euros ($6.7 billion), according to farmers’ group Coldiretti.

Temperatures have accelerated the ripening or scorching of vegetables, from grapes to cantaloupe, apricots and eggplant. It states that bee activity and pollination have been affected and wheat production has decreased.

“It’s not just a regular hot summer,” said Lorenzo Bazzana, agronomist at Coldiretti. “They say that plants must adapt to climate change, but we are talking about cultures that evolved slowly over thousands of years, they cannot keep pace with a climate that changes so quickly and so dramatically.”

Beyond Europe’s vegetable stalls, the good news is that grain markets – key to the food security of the poorest and most import-dependent countries – are still well supplied, thanks to record harvests of soy and corn in Brazil. Top wheat exporter Russia is gearing up for another bumper crop.

But the uncertainties are increasing. In an apt example, wheat fluctuated throughout the week in response to a flurry of news from the Black Sea.

It rose before slipping back when the export deal expired, then rose again as Russia threatened ships going to Ukrainian ports. It declined on Friday as Ukraine sought to restore an export pact.

Wheat is below its peak, but still above the pre-war average. Uncertainty over Ukraine grain pushed up prices earlier this week
More concerns arise from India’s move to ban exports of non-basmati white rice to rein in inflation.

According to food ministry data, retail prices of rice in Delhi have gone up by nearly 15% this year, while the average price across the country has gone up by 9%. Nomura Holdings Inc warned that the government could extend restrictions on other varieties of rice.

Elsewhere in Asia, Thailand is asking farmers to limit rice sowing to just one crop this year amid the threat of drought. In China, higher temperatures will cause early ripening of crops, affecting yields. President Xi Jinping on Thursday called for greater efforts to ensure grain security, state television reported.

Some parts of the US are facing similar tensions.

Although rainfall levels have improved after hot and dry conditions earlier this year, the weather is expected to rebound in the Midwest next week and into early August, as corn and soybean crops go through critical growth phases, said Arlan Suderman, chief commodities economist at brokerage StoneX.

The Agriculture Department estimates durum wheat production will fall 16% this year, with other spring varieties down 1%. The market will know just how bad the situation is when crop scouts hit the fields in North Dakota next week for the annual spring wheat tour.

Transportation problems can increase food safety concerns. Water levels on the Mississippi and Ohio Rivers are falling for the second year in a row, raising the prospect of shipping problems on critical freight routes.

“I would be surprised if global food prices didn’t start rising again after declining for more than a year,” said Caitlin Welsh, a food expert at the Center for Strategic and International Studies in Washington. “We are facing many threats to agricultural markets.”

Drought in Europe means grain production in Italy, Spain and Portugal will be 60% lower than last year, possibly contributing to the EU’s worst grain harvest in 15 years, according to farm lobbies Copa and Cogeca.

It has been described as an “extremely worrying” situation.

“Prices are always going to go down more than they go up,” said Tom Halverson, chief executive of CoBank, a cooperative bank that works with rural businesses across the United States. “It takes too long and it is too difficult to reduce inflation.”