Asia's food system is getting hit from two sides. Fuel and fertilizer supplies that farmers rely on have been knocked off course by the war in Iran, with a powerful El Niño piling extreme weather on top. In a report released Thursday, Verisk Maplecroft says those forces will intensify food insecurity and could spark unrest in countries including India, Indonesia and the Philippines. The consultancy ties rising food inflation to a higher risk of protests and political instability.
Indonesia - currently the largest palm oil producer globally - is battling out-of-control fires that are disrupting harvests. India, a leading rice exporter, is running 15% below normal monsoon rainfall. Thailand expects its sugar output to drop, and dependence on imported energy and fertilizers is further pressuring its farm sector. Pressure is mounting on Thailand's debt-laden farmers as the next planting season approaches.
"The impacts are increasingly visible," said Verisk Maplecroft. Many growers locked in planting and fertilization decisions during the height of the disruptions, the firm noted, so negative effects may be baked in even if geopolitics improve in the months ahead.
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Over 50% of the nations ranked high or very high risk on Verisk Maplecroft's Food Security Index are likewise placed in the top two bands of its predictive Civil Unrest Index. That group includes India, Bangladesh, the Philippines and Indonesia, and protests have already broken out there in recent weeks. "The data suggest if food price and availability pressures intensify, and governments are seen to respond ineffectively, unrest and political instability could emerge in these higher-risk markets," the report said.
ZAMS Asset Management's chief, formerly a trader at Balyasny, anticipates a super El Niño will create an "unusually alpha-rich environment." Moreton Capital Partners is aiming to raise $500 million to bet on the many ways El Niño will upend food prices. If you're not a commodities trader, the takeaway is simpler: when weather and geopolitics hit essential inputs, price swings in food-linked markets tend to follow. Building a plan that can live with volatility is the move.
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