Canadian Drought to Fan Global Food Inflation

02 September 2021

Canada’s role as the world’s largest producer and exporter of lentils is increasing the likelihood that its drought-ravaged Canadian Prairies will have an outsized impact on global food inflation, which is already at alarmingly high levels.

Currently, the lentil-weighted Gro Drought Index (GDI) for Canada, which produces 40% of the world’s lentils, is at a 20-year high for this time of year, suggesting a further decline in forecasted Canadian production. The lentil-weighted GDI for Canada has been indicating 20-year highs since mid-June.

Turkey, another leading lentil producer, is also suffering from drought that has impeded its crop. The lentil-weighted GDI for Turkey is now also at a 20-year high for this time of year. Wildfires are burning out of control in the country. 

Sri Lanka, the world’s seventh-largest lentils importer, has declared an economic emergency authorizing authorities to seize stocks of staple foods and set their prices in order to combat inflation. This is one of the most aggressive actions taken by a government thus far, but similar moves could happen elsewhere.

Additionally, to reduce the high cost of lentil imports, India, the world’s largest lentils importer, recently lowered its import tax from 10% to 0%.  

Gro has created a series of real-time food inflation indices for major countries, including the US, China, India, Brazil, Canada, and Turkey. 

According to Statistics Canada’s (STATCAN) projections, lentil production in the Canadian Prairies will likely come in at 1.98 million tonnes, a 31% decline versus last year. Comparable yield declines, such as those seen in 2001 and 2003, suggest that this year’s production will come in even lower, below 1.5 million tonnes. As Canada’s lentil harvest is ongoing, STATCAN will be updating its model-based field crop report later this month.  

These contractions in lentil production arrive at a particularly bad time; governments worldwide are under pressure to combat food inflation linked to soaring grain and oilseed prices.

The latest announcements from India and Sri Lanka indicate inflationary pressures are still strong around the world.

This insight was powered by the Gro platform, which enables better and faster decisions about factors affecting the entire global agricultural ecosystem. Gro organizes over 40,000 datasets from sources around the world into a unified ontology, which allows users to derive valuable insights such as this one. You can explore the data available on Gro with a free account, or please get in touch if you would like to learn more about a specific crop, region, or business issue.

 

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