Heatwaves and droughts caused by climate change are expected to be a major driver of looming global food shortages, with the resulting fallout set to ramp up human suffering, political instability and economic inflation from next year, consulting giant McKinsey has warned.
With the global food supply chain already reeling from the impacts of the Covid-19 pandemic and Russia’s ongoing war in Ukraine – one of the world’s biggest wheat and grain producers – further supply chain strains and damage to crop production from extreme and unusual weather across the globe are set to further exacerbate the situation, leaving the world facing a worsening food supply crisis over the next year or more, sobering new research released yesterday by McKinsey contends.
It calculates the world could see a shortage of 60 million tonnes of grain by the end of 2023, equivalent to the annual nutritional intake of three per cent of the global population, with dire impacts on human lives, geopolitics and the global economy.
Climate change is one of the leading threats to global food supplies highlighted in the report. It estimates recent heat waves in India combined with dry weather conditions this summer in Western Europe are on track to drive a shortage of 10 million tonnes of grain alone, providing a “vivid demonstration of the higher risk for food commodities posed by climate change”, it warns.
But the report also stresses that Russia’s invasion of Ukraine remains the single biggest driver of the current global food crisis, noting that the ongoing devastation of war in the key global “breadbasket region” has pushed global food security into a “state of high risk”.
As a result, it estimates up to 19 million fewer tonnes of grain might be exported from Ukraine this year, with the country’s crop production on track to decline by 35 to 45 per cent in the next harvesting season in the wake of Russia’s attack.
McKinsey said the consequences of the upcoming food crisis are likely to be the more pronounced than previous periods where the food system was rocked by supply shocks, such as the food price hikes of 2010-2011 which are thought to have contributed to the Arab Spring uprisings.
Historically, supply shocks within the food system have led to a slew of issues that hurt economic growth and undermine political stability, including inflation, lower fiscal strength, and malnutrition, and a confluence of present factors mean the world is particularly vulnerable to the impacts of food supply shocks, according to McKinsey.
Not only has the pandemic left countries poorer and less able to manage the impact of price hikes for food, but demand for protein and biofuel crop production is surging at the same time as climate change has introduced more risk to the agricultural sector, it said.
It predicts some countries will be able to weather the impacts of high global food prices better than others, with countries in the European Union, China and the US expected to be protected by their domestic production, high stock levels and high purchasing power.
But nations such as Bangladesh, Ethiopia, Somalia and Yemen are found to be “highly vulnerable” to the looming crisis, due to their dependency on food commodity imports and the sharp devaluation of their currencies in recent months, which has made US dollar-denominated purchases of wheat and oil costly, according to the research.
This article is part of the Net Zero Commodities Hub, hosted in partnership with Wood Mackenzie.
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