A global consensus on mitigation measures can address linkages between food price inflation and climate change

Fluctuation in food production is the cause of inflation across the world. It is caused by the long-term damage that has been done to the global atmosphere. (File image)

Widespread thunderstorms during mid-March have impacted the quality and quantity of the winter crop output in India. Estimates of crop loss due to unseasonal rains and early heatwaves in the north vary from a million tonnes according to the government of India to as much as 4-5 million tonnes according to the key trade body representing wheat millers. Similarly, a heatwave in March 2022 brought down the production below the demand of 100 million tonnes. On the other hand, rice production under flooded conditions has come up for criticism from climate change experts as being one of the significant causes of climate change, while water availability is impacting rice production levels in South Asia.

Need Consensus On Mitigation Steps

Climate change is a global phenomenon that needs global consensus on mitigation measures than local actions. However, what is happening in most countries is precisely the opposite, wherein mitigation measures are often driven by sheer logic with little support from abstract science and no consideration for their implications for the overall economic well-being of the global community. The irony is that mitigation measures also impact those vulnerable to climate change. This happens when options for meeting national carbon emissions are not examined from a broader perspective beyond compliance. Regarding developed nations, the cost of the mitigation measure matters less than the global economic implications. That's an indication wherein threats to economic growth matter more than the equity part of it.

While fluctuation in food production is the cause of inflation across the world, it is caused by the long-term damage that has been done to the global atmosphere. The Food and Agriculture Organization (FAO) of the United Nations tracks food price trends through its Food Price Index. According to the FAO, food prices are a tad higher than last year's levels despite the Black Sea Grain Initiative that had freed Ukrainian grains to be exported. The FAO's Food Price Index shows that food inflation is a global phenomenon that affects both developed and developing countries. However, the impact of food inflation varies across countries and socio-economic groups. While food inflation can severely impact the population of least-developed nations, most of whom are already suffering from the problem of malnutrition, it may not be a problem for most in the developed nations. Developed countries with a diversified economy and a higher technological and institutional capacity are likely to be least affected by food inflation due to climate change and better food access.

Food As Biofuels

As climate change impacts food availability to the most vulnerable, there has been an increasing trend of using agricultural food stock for biofuel
purposes, be it bio-diesel or ethanol-blended petrol/gasoline. It is estimated that about 20 percent of global corn and 7 percent of global cane production are used for biofuels. Some production of sugar beet and wheat is also diverted for making biofuels. Biofuels have been promoted as a potential mitigation measure for reducing greenhouse gas emissions from the transportation sector through governmental mandates for ethanol blending, tax incentives, and subsidies in various economies. The rationale is that using ethanol-blended gasoline will reduce vehicle emissions, but scientific studies suggest that it remains the same or more in some cases.

Stretching it backwards, sciences tell us that the cultivation of sugarcane, corn, and other crops offsets carbon from the atmosphere. But if the carbon costs of industrial cultivation and processing of these food crops are considered, the production of some biofuels may turn into carbon-positive products. There are no studies yet proving that there are net carbon emission savings in the use of biofuels. The same is the case with global soy oil and palm oil availability for human consumption. About 20 percent of global palm oil and 22 percent of global soy oil that might otherwise be used in human consumption is currently used for fuel purposes, further fuelling food inflation when a tenth of the global population lives in poverty.

Incentives From Elevated Oil Prices

The irony is that higher gas and oil prices provide higher incentives for enhanced use of biofuels to meet emission targets as in the EU and for import substitution as in India, Indonesia, Brazil, etc to lower the import bill for oil and meet climate goals. Higher energy prices not only keep food logistics costs higher but also increases the cost of cultivation due to higher input costs. Furthermore, the production of biofuels has been associated with deforestation, land-use change, and biodiversity loss, which have adverse environmental impacts.

Addressing the linkages between food inflation and climate change requires a global consensus on accepted mitigation measures, backed by scientific studies, to keep away those implemented for economic purposes. At the same time, such accepted mitigation measures should also ensure food security for the most vulnerable in the world. To break this linkage, the mitigation measures should also consider the differential impact of climate change on different countries and socio-economic groups. Sustainable and climate-smart agriculture practices, investment in infrastructure, and policy interventions are potential mitigation measures that can address the linkages between food inflation and climate change.

V Shunmugam is Adjunct Faculty at the National Institute of Securities Markets. Views are personal, and do not represent the stand of this publication.