Three serious weather-related disasters could undermine entire global food system, insurance giant Lloyd's says
ROME, June 16 (Thomson Reuters Foundation) - Three serious weather-related disasters could undermine the entire global food system, leading to higher prices and potentially triggering riots and agroterrorism attacks, insurance giant Lloyd's warned on Tuesday.
It said the world's "overstretched" and fragile food markets were becoming increasingly vulnerable to shocks such as plant pandemics or catastrophic weather linked to climate change.
Three weather events such as floods and droughts could lead to a 10 percent drop in corn production, an 11 percent decline in soy cultivation and a 7 percent fall in rice harvests, it said in a report.
"The food system is becoming increasingly vulnerable to acute shocks," the 327-year-old insurance firm added, laying out various threats to global diets.
Governments and companies need to realise that climate change is exacerbating the risks faced by a growing global population, and must adjust their plans accordingly, said the report Food System Shock.
Possible triggers for dramatic price rises and social unrest include: flooding in the Mississippi River reducing U.S. crop yields, a return to the droughts faced by South Asia in 2002, or a soybean rust outbreak in South America.
Under any of these scenarios, the insurance industry would need to pay claims quickly to help communities recover, senior Lloyd's official Tom Bolt said in a statement.
The industry has a "role to play in improving the resilience of communities, businesses and governments ... to ensure they have a greater awareness of the complex risks they face in a globalised world", Bolt added.
Agriculture is the world's largest employer, providing livelihoods for 40 percent of the planet's population, the report said. These producers would be some of the first affected by price spikes due to climate change or a disease outbreak.
Rapidly rising prices due to a severe weather event or prolongued political instability would trigger food riots in the Middle East, North Africa and Latin America with "knock-on effects" for a wide range of businesses, Lloyd's said.
While stock prices for major agricultural firms could rise in the event of a crisis, European financial markets could lose 10 percent of their total value, and U.S. markets 5 percent if food prices spike again as they did in 2007-2008.
Countries facing acute shortages and price spikes could see citizens unleashing their fury against companies.
Companies seem to back Lloyd's contention that agricultural production is becoming more unstable, despite global food prices hovering at a four-year low according to the U.N. food agency.
The global market for agricultural insurance has quadrupled since 2005, and is growing at an average of 20 percent annually, Lloyd's said.
(Reporting by Chris Arsenault, editing by Emma Batha; Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, women's rights, trafficking, corruption and climate change. Visit www.trust.org)
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