“It is absolutely a reality that climate change is going to significantly impact agriculture,” says Sunny Verghese, Olam International Chief Executive. “It impacts in both from the nexus it has with water, and the nexus it has with micro-climate, as well, so it is probably the most important driver to future agricultural production, productivity and therefore price,” he added.
Mr. Verghese was on a visit to the Gold Coast to address the 2014 Australian Cotton Conference. Coming from the head of one of the world’s largest agricultural commodity trading companies in the world, this warning should not be taken lightly by those in the Australian agricultural sector.
A recently conducted Massachusetts Institute of Technology (MIT) research seems to support his claims. In the journal Nature Climate Change, this particular research warns that the combination of rising temperature and air pollution will have an adverse effect on crop yield, putting pressure on the food system.
A similar research from Stanford University indicates that it is 20 times more likely for the production of wheat and corn to decrease because of climate change. In addition, a study conducted at the University of Leeds concluded that the effect of climate change could be felt as early as 2030.
According to a research made by the National Academy of Sciences of the United States of America, the decrease in agricultural yields will be exacerbated by the fact that more and more people are increasingly eating the same types of foodstuffs. That means the reliance on just a few types of crops will make the food system more susceptible to any drastic change.
Olam International Warns of Agricultural Threats
From these research findings, it is no wonder that the head of Olam International, one of the largest commodity traders in the world, would give his dire warning to the Australian agricultural sector.
Based in Singapore, Olam International has operations in 65 countries. Olam International is the largest trader in cashew nuts. It is also the biggest trader in cotton and coffee. Olam International has been trading with Australian companies since 2007.
It owns Queensland cotton, has investments in wool, grain and pulse industries. Olam International also manages 12, 000 hectares of almond Orchard in Victoria. It is therefore to its advantage if the Australian government and its business enterprises will heed his warnings.
One of the ways Olam International is tackling the problem of climate change, according to Mr. Verghese, is by reducing their water consumption. “We have a target that in our tier one manufacturing and processing facilities, we will reduce water usage per tonne of product that we supply by 10 per cent by 2015, and in our farms by 10 per cent by 2020,” he said.
He had high hopes for Australia if it makes the necessary measures to address climate change issues. “But Australia will be the most competitive producer, Australia will set the standards on water usage efficiency, on agronomic practices, on breeding better varieties, and therefore Australia will always be very competitive,” he confidently added.