Tomatoes on burgers are disappearing, olive oil is getting more expensive...and it's all because of the heat?

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Apparently, climate change is changing the flavor of burgers.

What I mean is that in India, the price of tomatoes has skyrocketed by 445% in six months. Some McDonald's locations have posted signs saying that they can no longer include tomatoes in their burgers due to the high price of tomatoes and the lack of inventory. Some of the menu items, such as the Marahaza McChicken Burger, which is a local specialty in India, have tomatoes as an ingredient, but the rest of the menu will be tomato-free for the foreseeable future.

And it's not just McDonald's restaurants - the tomato crusade is happening all over India. According to foreign media, the retail price of a kilogram of tomatoes sold in the capital, New Delhi, is 120 rupees (about $1900), a fivefold increase in half a year, compared to the 22 rupees (about $347) the same amount was selling for earlier this year. The shortage is due to a combination of unusually high temperatures of over 40 degrees last month and the monsoon rainy season being a week behind its normal start date.

Tomatoes are a staple on the Indian table, along with onions, and their prices can sway public opinion and spark protests. In fact, it's been said that the ruling party once lost an election because it couldn't control the price of onions. What started as a staple on the Indian table has ended up changing Indian tastes.

One of the main reasons for this spike in tomato prices is climate change. Normally, tomatoes are expensive in India due to the low production in June and July, but the recent spate of hotter-than-normal weather, coupled with a delayed monsoon rainy season, has adversely affected tomato cultivation. In the middle of last month, India experienced several days with daily highs of 40 to 45 degrees.

Poor harvests due to extreme weather are already making food unaffordable, and a food crisis due to climate change could lead to a survival crisis. Greenpeace, an international environmental organization, has issued an eerie warning that climate change is making it harder to grow many types of food and reducing production, and that if climate change accelerates further in the future, food that has been readily available could become scarce.

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According to foreign media such as the UK's Guardian and India's Business Standard on the 11th (local time), the heavy rains that have fallen in India have caused retail food prices, including tomatoes, to skyrocket in Delhi and its neighboring areas in northern India. The aforementioned retail price of 120 rupees (about 1890 won) for a kilogram of tomatoes is more expensive than 96 rupees (about 1514 won) for a liter (L) of gasoline. As if to satirize the current situation, an image of the phrase "Give me a kilogram of tomatoes and I'll give you an iPhone" is being used as a meme on social media.

India is the world's second largest producer of tomatoes. Along with onions, tomatoes are a staple in the lives of Indian consumers: masala, the most popular spice in Indian cuisine, uses tomatoes as a key base ingredient in its sauces, and Andhra tomato kura (tomato curry) is a popular Indian dish.

One farmer in India reported that thieves broke open boxes and stole 150 kilograms of tomatoes. McDonald's Southwest India franchisee explained that this is a seasonal occurrence that happens every year during the monsoon season (the country's equivalent of the rainy season).

India has a "monsoon economy," and the impact of the monsoon on the economy is significant. Even if the monsoon, which usually starts in early June, is just two weeks later than average, it has a direct impact on the Indian economy. Agriculture accounts for 30% of India's gross domestic product (GDP), and 70-80% of the absolute precipitation needed to grow crops falls during the monsoon.

This time, it was the rains that exceeded expectations: more than 10 times the average rainfall for June and July as measured by the India Meteorological Department, causing flooding and poor harvests of various crops. Until May, India's inflation rate had been slowing, but the monsoon rains have changed that in just two months. The accompanying rise in the price of tomatoes and other vegetables is a major contributor to inflation volatility, which can shake up the economy.

Local media reported that tomato prices were not expected to stabilize until August, when the tomato harvest is in full swing. If inflation prolongs and fails to stabilize prices, public anger against Prime Minister Narendra Modi and his ruling party will increase.

It's not just Europe that is groaning under the weight of rising food prices. The price of olive oil has soared to an all-time high as an unprecedented drought has gripped southern Europe, including Spain, with olive groves in the major producer countries suffering from poor harvests, and it's likely to stay that way for some time.

According to the Financial Times (FT) on December 12, the price of olive oil in Europe has now exceeded 7 euros (about 10,000 won) per kilogram, and has not slowed down since exceeding 4 euros (about 5,700 won) per kilogram for the first time in September last year.

Again, the climate crisis is a major factor. High temperatures and drought in Spain, the world's largest olive grower, and Portugal, Italy, have combined.

It's a big deal in Spain, where olive oil is a staple of life. The Spanish media has been breaking the news every day, with details on where to buy olive oil cheaply.

The situation is such that stocks held by olive oil producers in southern Europe are dwindling at a faster rate than last year. Olive oil stocks are shrinking by about 80,000 tons every four weeks, signaling a severe shortage three months into this year's harvest season. Worse, the situation is likely to continue into next year, with Kyle Holland, a vegetable oil analyst at commodity data firm Mintec, predicting that the olive oil rally will continue into next year, as there is growing concern that the situation will not improve beyond this harvest season.

Some big money investors are worried that the climate crisis will continue to hit agricultural crops and that this will lead to continued food inflation (price rises), which will change the course of the economy going forward. Russia's invasion of Ukraine has pushed up the cost of fertilizer, and the lack of a good supply of sunflower seed oil, a substitute for olive oil, is also driving up the price of olive oil. They believe that high food prices will keep global inflation stuck, and that governments will spend huge amounts of money to support food prices, crowding out other investments.

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We've already talked about the possibility of a food crisis due to weather-induced sugar inflation, and this summer's El Niño, the strongest El Niño in seven years since 2016, is raising concerns that prices could spike again if grain production is hit.

With food supply chains unstable in the wake of the war in Ukraine, the risk of extreme weather is likely to put further pressure on prices, and the world's leading organizations are all forecasting a strong El Niño later this summer. El Niño brings extreme weather events such as heavy rainfall, heat waves, and droughts, which can be devastating to the production of key agricultural commodities and grains.

In particular, major food commodity producers in Southeast Asia, such as Australia (wheat) and Indonesia (wheat and raw sugar), and South America, such as Chile and Brazil (wheat, corn, soybeans, etc.), are directly affected by El Niño, so rising prices due to supply disruptions are inevitable. Therefore, some analysts have suggested that El Niño may emerge as a "gray rhinoceros" that poses a major obstacle to the global economic recovery.

According to the World Economic Outlook for the Second Half of 2023 report released by the International Finance Center last month, the El Niño phenomenon in the tropical Pacific Ocean is likely to intensify and develop into a superstorm towards the end of the year, causing a surge in grain prices as agricultural crops suffer.

The report estimates global economic damage from El Niño at $3 trillion by 2029, a loss estimate that includes the impact of a delayed economic recovery for years after the El Niño ends. In fact, during the 2015-2016 El Niño, global grain production fell by 1.6% and sugarcane raw sugar production fell by 7.1%. Add the El Niño risk to the aftermath of the Russia-Ukraine war, and the outlook for prices is even darker.

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