Published: 16 June 2015 at 15:39
Lloyd’s study sets out far-reaching impacts of extreme weather and plant disease
The vulnerability of the global food system to sudden shocks, and the repercussions for communities, businesses and governments, is highlighted in a report published today by Lloyd’s, the specialist insurance and reinsurance market.
Supported by academics at Anglia Ruskin University, the report contains a scenario where disruptions such as weather catastrophes and plant pandemics – which are exacerbated by climate change – have far-reaching economic and humanitarian consequences.
Launched today at Expo Milano 2015, the study shows how three events – El Nino, the spread of windblown wheat rust in Russia and warmer temperatures in South America – could lead to wheat, maize, soybean and rice prices quadrupling, significant losses on European and US stock markets, food riots and wider political instability.
The key findings of the report are:
• A combination of just three catastrophic weather events could lead to a 10% drop in global maize production, an 11% fall in soybean production, a 7% fall in wheat production and a 7% fall in rice production.
• Wheat, maize and soybean prices could increase to quadruple the average levels experienced during the 20 years prior to the global food price shock of 2007/8. Rice prices could increase by 500%.
• The scenario indicates this series of events has the potential to lead to food riots breaking out in urban areas across the Middle East, North Africa and Latin America, leading to wider political instability and having knock-on effects for a wide range of businesses.
• While agriculture commodity stocks might benefit, the overall economic impact of high food prices, combined with rising political instability, could severely impact financial markets. The scenario indicates that the main European stock markets might lose 10% of their value and US stock markets 5%.
Director of Anglia Ruskin University’s Global Sustainability Institute Dr Aled Jones, who worked on the report, said:
Tom Bolt, Director of Performance Management at Lloyd’s, said: