Climate inflation and The Impact of Climate Change on International prices of coffee, cacao, and olive oil

Introduction: The Rise of 'Climateflation'

In recent years, the world has witnessed a surge in agricultural commodity prices, driven by the adverse effects of climate change on crop production. This phenomenon, dubbed 'climateflation,' is reshaping the global market for coffee, cacao, olive oil, and more.

Coffee Crisis: Drought Devastates Southeast Asia

Vietnam, the largest producer of Robusta coffee, has seen its production plummet by 20% due to severe drought conditions. This decline in output has led to a significant spike in global coffee prices, with the London Robusta futures price reaching an all-time high of $3,948 per ton. As a result, coffee importers like Korea are facing unprecedented challenges in sourcing affordable beans.

Cacao Catastrophe: West Africa Struggles with Drought

West African countries, which account for 80% of the world's cocoa production, have been hit hard by droughts linked to climate change. This has caused cocoa prices to triple in just one year, reaching an all-time high of $10,050 per ton. With production levels expected to decline by 11% in the 2023-2024 season, chocolate manufacturers are bracing for a challenging year ahead.

Olive Oil Outcry: Spain's Drought Dilemma

Spain, the world's largest producer of olive oil, has experienced two consecutive years of drought, leading to a drastic reduction in output. As a result, the price of Spanish olive oil has more than doubled in the past year, prompting concerns about supply shortages and price volatility. Other major olive oil-producing countries, including Greece, Italy, and Portugal, have also faced challenges due to adverse weather conditions.

Sugar Squeeze: India and Thailand Face Drought

Severe droughts in India and Thailand, the world's second and third-largest sugar exporters, have caused sugar production to plummet. While there have been slight improvements in harvest speeds and production forecasts, sugar prices remain significantly higher than in previous years. This underscores the far-reaching impact of climate change on agricultural commodities.

The Road Ahead: Navigating Climate Inflation

Research from the Potsdam Institute for Climate Impact Research suggests that food prices could rise by up to 3.2% by 2035 due to the effects of climate change. With rising temperatures threatening crop yields and driving up production costs, the need for sustainable agricultural practices and adaptive strategies has never been more urgent.

Conclusion: Embracing Resilience in a Changing Climate

As 'climateflation' continues to reshape the global agricultural landscape, stakeholders must work together to mitigate its impact and build resilience in the face of adversity. By leveraging innovative technologies, sustainable farming practices, and international collaboration, we can create a more resilient and sustainable food system for future generations.


Resources:

https://www.yna.co.kr/view/AKR20240414035900030?section=industry/agriculture