SINGAPORE, June 26 (The Straits Times/ANN): While reducing carbon emissions will help manage the extreme weather conditions that have led to food price spikes in South-East Asia, this transition to a lower carbon future could come with its own costs, one think-tank said.
Global forecasting firm Oxford Economics estimated that the costs of producing food could go up by as much as 80 per cent in countries such as Indonesia by 2050, as governments implement measures aimed at achieving net zero.
This is if regional authorities do not also introduce initiatives to mitigate the impact to the food supply chain, said Oxford Economics Asian macro consulting head Tom Rogers, during a webinar on Thursday (June 23).
The webinar, hosted by Oxford Economics, discussed findings from a study into the impact of climate change on food prices.
The study, commissioned by industry body Food Industry Asia and conducted by Oxford Economics, found that heatwaves in Thailand in December 2014 and in Vietnam in February 2019 contributed to food prices going up by about 6 per cent during those months.
"Those types of extreme weather events are becoming more frequent, and they will become more frequent in the years to come," said Rogers, who is based in Singapore.
Such extreme weather will be less frequent should the region meet the International Energy Agency's goal of achieving net zero emissions by the middle of the century, he added.
However, governments should protect consumers from the added costs of moving towards sustainable methods.
Oxford Economics suggests that the authorities provide support to farmers adopting technologies that improve resilience to extreme weather as well as encourage the uptake of farm insurance, which would allow farmers to restart production more quickly after events such as floods or heatwaves.
The think-tank recommends that they support farmers in adopting measures such as solar panels and the conversion of food waste to energy, which would make them less reliant on electricity from the grid.
Protecting consumers from absorbing the costs associated with the move towards greater sustainability is especially important for poorer households, which spend a greater proportion of their income on food.
"We think there is a lot that governments can do about it, we think there are plenty of policy options," he said.
"There is a need to start the discussion on how best to go about both mitigating short-term impacts of food price volatility and also tackling that cost of transition."
Rogers noted the study was published in February, before the Russian invasion of Ukraine, which impacted energy and food prices across the world.
On Thursday, it was reported that Singapore's core inflation hit 3.6 per cent in May on the back of rising food prices – the highest core inflation rate the Republic has faced since December 2008, when it hit 4.2 per cent.
Noting some countries have begun using more coal for energy generation to avoid being dependent on Russian gas, the economist said it remains to be seen whether the conflict will ultimately speed up or slow down the transition to net zero. - The Straits Times/ANN