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Rising Gas Prices Threaten Social Stability and Food Security in Latin America


Rising fuel prices have already sparked protests in Argentina, Ecuador and Panama. Their neighbors could be particularly sensitive to rising prices at the pump, as the region lacks alternative means of transport, such as railways and waterways which are more common in Europe and North America – and consume less fuel.

“The price of fuel is an anchor for the whole economy: if fuel goes up, it has a direct impact on all kinds of prices,” says Sergio Guzman, director of Colombia’s Risk Analysis, a business consultancy. in Bogotá.

To compound the problem, parts of the region need greater amounts of fuel than ever before – ironically, to offset the effects of climate change.

In Ecuador, where bananas are the main agricultural export, diesel pumps move water in and out of banana plantations – a need that has become more urgent as increasingly intense rains hit the country, according to the analysts.

According to Raul Villacres of Pulso Bananero, a banana trade consultancy in Guayaquil, Ecuador’s banana production is down 7% from last year, partly due to rising diesel costs. and gasoline.

A similar situation affects the fishing industry in Colombia, where residents enjoy some of the cheapest fuel prices in the world. Yet when the Ministry of Energy and Mines released new regulated tariffs in early July, it sent shockwaves across the country.

Twice a week, fisherman Jimmy Murillo sets sail from the port town of Buenaventura on Colombia’s Pacific coast. It spends an average of two or three days at sea before returning with its catch, but lately trips have become longer as fish stocks have dwindled and fishermen are heading further offshore to find better prey.

Ironically, one of the reasons fishing catches have declined is climate change, and anglers like Murillo have to use more fuel to mitigate its impact. One reason, Murillo told CNN, is that as rainfall patterns change and more torrential rains hit Colombia, rivers and streams reach the ocean carrying more sand and dirt in their waters, and because of this most fish migrate farther. shore, where the water is clearer and cooler.

“In January, fuel for our boats was 8,000 pesos ($1.96) a gallon, now it’s over 9,800 pesos ($2.70). Every week it goes up a little more, and the government doesn’t help,” Murillo told CNN.

Nicole Muñoz of Albacora, a small-scale sustainable fishing company in Bogota that transports around 400 kilograms of fish from the Colombian coast to the capital every week, also says gasoline is key to its business model.

“We use fuel for fishing boats, to transport products from the shore to airports, then on planes, all our logistics depend on it,” Muñoz told CNN.

While fish prices have not risen as much as other food sectors in Colombia, such as beef and poultry products, Muñoz believes prices will start to rise as the impact of more expensive fuel will be felt.

Rising Gas Prices Threaten Social Stability and Food Security in Latin America

In April, the World Bank revised its growth forecast for Latin America and the Caribbean to 2.3% this year, losing 0.4 percentage points due to the impact of the war in Ukraine and the rise world prices. At the same time, the Bank estimates that Latin American countries have lost the equivalent of 1.7% of their GDP due to climate-related disasters over the past two decades, and expects the Latin American agriculture will be in the crosshairs as the planet warms.

As everyday life becomes more and more expensive, could the popular anger seen in Panama, Ecuador and Argentina spread to Colombia and other countries in the region?

“It’s really not a question of if, but when,” says Guzman of Risk Analysis Colombia.

He argues that regional governments will not be able to spend enough to mitigate the rising cost of living and pacify their populations. “As pockets get tighter, people are going to lose patience, not because of anything governments are doing, but because those countries don’t have the capacity to increase social spending.”

Ecuadorian President Guillermo Lasso, for example, has been forced by protests to cap gasoline prices at $2.40 a gallon – a move that will cost the country another $3 billion by the end of the year. year, according to Finance Minister Simon Cueva. .

In Argentina, where the country’s finance minister was forced to resign due to extreme inflation, a Buenos Aires food delivery boy told CNN the year so far has proven to be more resentful than early years of the pandemic.

“Everyone is complaining,” Federico Mansilia, a father of two, told CNN. “Those who get social support because they say it’s not enough, and those who don’t get it because they want social support. At least during the pandemic, the government and the opposition have worked together, now the polarization and bitterness are rising again.”

The only hope for a moment of national unity, Mansilia says, is if Argentina wins the FIFA World Cup in Qatar at the end of the year.

“It will really bring the country together. If we win, everyone will be happy, no inflation or gas prices to bother us. But right now things are pretty miserable.”

Cnn

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