Geopolitical tensions and protectionist policies have been exacerbating inflation globally, according to Olam Agri
Global agricultural commodity trader Olam Agri has warned of “food wars” as geopolitical tensions drive increased protectionism amid concerns about dwindling food supplies. The Singapore-based trading house, part of the Olam Group operating in over 60 countries, supplies food and industrial raw materials to 22,000 customers worldwide.
“We have fought many wars over oil. We will fight bigger wars over food and water,” said Olam Agri CEO Sunny Verghese at the Redburn Atlantic and Rothschild consumer conference last week.
Verghese highlighted that trade barriers imposed by governments seeking to bolster domestic food stocks have worsened food inflation. He noted that food prices climbed after the pandemic and surged following the Ukraine conflict and Western sanctions against Russia. These restrictions have impeded grain and fertilizer exports, exacerbating food insecurity in poorer nations and intensifying the cost-of-living crisis.
Despite this, Verghese pointed out that large agricultural commodity traders saw record profits in 2022. He attributed elevated food price inflation in part to government intervention, as wealthier nations stockpiled strategic commodities, “creating an exaggerated demand-supply imbalance.”
“India, China, everybody has got buffer stocks,” said Verghese, adding, “That is only exacerbating the global problem.”
Verghese argued that climate change, which has hindered global agricultural production, has also fueled protectionism worldwide. He cited Indonesia’s 2022 ban on palm oil exports to safeguard its domestic market and India’s imposition of export restrictions on certain rice types last year to curb domestic price increases.
“You’re going to see more and more of that,” Verghese said.
He urged the gathering of consumer industry executives, including leaders from Coca-Cola and Associated British Foods, to “wake up” and take stronger action on climate change.
UN human rights chief Volker Turk warned that the world is headed towards a catastrophic future where tens of millions face famine unless climate change is adequately addressed. He stressed that extreme weather events are severely impacting crops, herds, and ecosystems, raising further concerns about global food availability.