- Food wars will rise amid trade barriers and climate risk, Olam Agri's CEO warned.
- Food inflation has already gone up from a growing supply-demand imbalance.
- Protectionism is rising as countries look to protect their domestic markets.
"Food wars" are looming over global stability, as trade barriers and the climate crisis strain supply, the head of trading firm Olam Agri warned.
In comments first reported by The Financial Times, CEO Sunny Verghese signaled that rising restrictions on trade are already amplifying food inflation, leading to an exaggerated demand-supply imbalance.
"We have fought many wars over oil. We will fight bigger wars over food and water," he said during last week's Redburn Atlantic and Rothschild consumer conference.
Though agricultural commodity traders took the blame for rising food costs after Russia's 2022 invasion of Ukraine, the CEO pushed back. Instead, the outbreak of non-tariff trade barriers was likely the chief culprit, with 1,266 curbs proliferating that year.
While the exchange of commodities grew tighter, demand swelled among wealthier economies, which focused on creating surplus stocks.
Higher prices not only amplified a cost-of-living crisis in certain regions but growing food scarcity since COVID-19 has created insecurities in poorer regions, the outlet said.
At the same time, a hotter climate has exacerbated challenges in agricultural production, spurring aggressive rallies across a number of commodities, including cocoa, coffee, and sugar.
According to Verghese this, too, is causing global governments to turn towards protectionism, in an effort to shield domestic markets. Examples include an Indonesian ban on palm oil exports and an Indian curb on rice exports.
"That was precisely the wrong thing," he said. "You're going to see more and more of that."
In the face of climate risks, the trader pressed for the industry to get serious on taking action. For governments, carbon taxation is an appropriate policy, he argued.