Analysts are issuing warnings about a robust El Niño forming in the Pacific Ocean, which may drive up global food prices in the coming months and years. In early July, the World Meteorological Organization (WMO) predicted that the current El Niño weather patterns would become more intense, increasing the chances of heatwaves, droughts, heavy rainfall, and other severe weather events across various regions.
The National Oceanographic and Atmospheric Administration (NOAA) recently indicated an 81% chance of a “very strong” El Niño between October and December, suggesting it could rank among the largest since records began in 1950. Experts, including those at the World Bank, caution that such an occurrence, referred to as a “super” or “Godzilla” El Niño, might disrupt global agriculture and food supply chains through next year, heightening economic pressures worldwide.
Understanding El Niño
El Niño, which means “little boy” in Spanish, is characterized by unusually warm ocean surface temperatures in the central and eastern tropical Pacific. This climate pattern disrupts normal weather worldwide, often resulting in flooding and heavy rainfall in some areas while causing droughts and heatwaves in others. According to the World Food Programme (WFP), these conditions can lead to drought in regions and severe flooding in others, damaging crops, livestock, and infrastructure, thus reducing food production and disturbing markets.
Impact on Food Prices
In early June, the World Bank highlighted that the development of El Niño might exacerbate current issues in the food supply chain, which are already troubled by oil, gas, and fertilizer shortages linked to the U.S.-Iran conflict. Analysts at Schroders Wealth Management stated that a super El Niño could significantly raise food prices over the next year, as adverse weather adds to ongoing economic and geopolitical challenges. They indicated that a very strong El Niño might double global food prices over the next year if historical trends persist.
Risilience, a climate-risk analytics firm, suggests that an extreme scenario could result in a 14.3% reduction in global agricultural production, causing about $342.2 billion in losses and “price shocks of 10% to 50% across major food crops.”
William A. Masters, a food policy and economics professor at Tufts University, noted that while the event would be dire for many farmers and low-income individuals in Africa and Asia, the impact in the United States will be mitigated due to diversified import supply chains. For consumers, reliable access to energy, labor, and trade remains the primary driver of food price inflation.
Chris Barrett, a professor of applied economics at Cornell University, stated that regions like Australia and South and Southeast Asia are likely to endure the most severe effects from El Niño, especially with rising prices for wheat, rice, and palm oil. These areas, already affected by supply disruptions due to the Iran conflict, will experience concentrated challenges.
Fortunately, global cereal stocks are relatively high after successful harvests last year, providing a buffer to contain the El Niño shock if managed properly. Joseph Balagtas, a professor of agricultural economics at Purdue University, emphasized that the U.S. and global price effects will vary by crop. For instance, fruits and vegetables grown in limited areas might face swift price changes due to local weather impacts.
He expressed concerns about rice-growing regions, given that rice is a staple for billions in Asia, heavily reliant on monsoon rains. Disruptions in these rains due to El Niño could threaten food security and affordability where people rely on locally produced rice.
Additionally, El Niño’s effects on energy are predicted to be extensive. Wood Mackenzie’s vice chairman for the Americas, Ed Crooks, highlighted in a report that severe droughts might affect global energy trade, with changes in cloud cover, wind speeds, precipitation, and snow melting impacting renewable energy generation.