In Drought Crisis, Company Sees Profit Opportunity
As drought consequences increase, UN agencies call for global action plans while one company is eyeing profits from the crisis
While the United Nations declared Tuesday that better drought strategies are needed for the world now suffering the effects of climate change, one company is acknowledging that the crisis is a perfect money making opportunity.
“Climate change is projected to increase the frequency, intensity, and duration of droughts, with impacts on many sectors, in particular food, water, and energy,” said Michel Jarraud, World Meteorological Organization (WMO) Secretary-General. “We need to move away from a piecemeal, crisis-driven approach and develop integrated risk-based national drought policies.”
“The 2010 drought-induced famine in the Greater Horn of Africa, the ongoing crisis in the Sahel region and the extensive drought in the USA show that developing and developed countries alike are vulnerable,” added Luc Gnacadja, Executive Secretary of the UN Convention to Combat Desertification (UNCCD). “Effective long-term solutions to mitigate the effects of drought, and address desertification and land degradation urgently need to be mainstreamed in national development plans and policies.”
While droughts have not been limited to the U.S., they have global impacts due to the U.S. role in grain exports, especially corn, and the consequences can be deadly.
"Recent droughts in the mid-western United States threaten to cause global catastrophe," Professor Yaneer Bar-Yam, president of the New England Complex Systems Institute, told Al Jazeera.
While many around the world will see hardship and food insecurity from drought, one business is seeing dollar signs.
Chris Mahoney, director of agricultural products at commodity trading company Glencore, told a conference call on Tuesday that the current drought meant "opportunities" that would be "good for Glencore."
"In terms of the outlook for the balance of the year, the environment is a good one. High prices, lots of volatility, a lot of dislocation, tightness, a lot of arbitrage opportunities."
"I think we will both be able to provide the world with solutions, getting stuff to where it's needed quickly and timely, and that should also be good for Glencore," said Mahoney.
Reacting to this, writer and global food policy expert Raj Patel told the Guardian, "They [Glencore] are millionaires making money from other people's misery caused by the drought. It's the sad fact of how the international food system – that they pushed for and our governments gave to them – works.
"It's unsurprising that a crisis is a revenue generator."