El Nino, the weather pattern that caused US$96 billion of crop and property damage in 1997 and 1998, may be returning.
An unexpected warming of the Pacific Ocean in February reduced air pressure from Tahiti to Australia to a 22-year low. A similar change eight years ago developed into an intense El Nino that caused droughts in Asia, floods in South America and tornadoes in the United States.
"It's more than double the normal risk," said Roger Stone, an associate professor of climatology at the University of Southern Queensland in Australia. The chances of an El Nino pattern developing by the middle of the year are about 50 per cent, compared to 20 per cent normally, Stone said.
The return of El Nino, which emerges first in Australia and takes months to develop, may worsen droughts that parched coffee trees in Viet Nam, sugar cane fields in India and Thailand and soybean plants in Brazil, boosting the cost of products such as Procter & Gamble Co's Folgers coffee. GE Insurance Solutions, a unit of General Electric Co, has already halted sales of agricultural policies to new clients.
"If you're running an insurance company, that's enough to start changing your risk profile assessments," said Stone, who accurately predicted an El Nino in 2002 that triggered Australia's worst drought in a century. He has been tracking El Nino patterns for more than two decades.
"It's a 50-50 chance," said Karl Schneider, worldwide manager for agricultural insurance for GE Insurance Solutions in Winterthur, Switzerland. "El Nino will affect us worldwide in agriculture. In 1998, the last bigger one, we had losses in Latin America."
The prospect of an intensifying El Nino and GE's desire to balance its risk profile led the company to stop offering agricultural insurance to new clients last year, Schneider said last week in a phone interview from Port Douglas, Australia, where he was attending an El Nino conference. Policies are still being written for existing customers, he said.
"The lead indicators have us worried about another El Nino situation," said Sunny Verghese, chief executive of Olam International Ltd, one of the largest exporters of coffee from Viet Nam. "In terms of crop production, it is a risk. Clearly we are seeing that in Viet Nam."
Drought in Viet Nam, the world's second-largest coffee grower, sent the cost of beans to a five-year high last month and prompted Procter & Gamble and Kraft Foods Inc to raise retail prices. At least a third of the Vietnamese crop has been damaged. The price of robusta coffee, the variety grown in Viet Nam, has surged by about 27 per cent in London this year to US$964 a metric ton.
Parched cane crops in India and Thailand pushed sugar to almost a four-year high, while a dry spell in Brazil has sparked a 21 per cent rally in soybeans since February 4.
El Nino, which means "little boy" in Spanish, got its name from Peruvian fishermen who noticed that warmer sea temperatures reduced their catch around Christmas. An El Nino occurs about two to three times a decade and can last 18 months.
The pattern is fueled by rising Pacific Ocean temperatures coupled with a drop in barometric pressure that shifts the warm waters east, moving clouds and moisture to the Americas and reducing rainfall in Asia and Australia.
A stronger pattern, when surface temperatures in the tropical Pacific are more than 2 degrees Celsius (3.6 degrees Fahrenheit) warmer than average, increases the probability of worse tornadoes and droughts. An El Nino that developed in 2003 was classified as weak, and the 1997-98 version was very strong.
Below the surface, the Pacific is more than 4 degrees Celsius warmer than average, Australia's weather forecaster said on April 6.
(China Daily 04/13/2005 page12)
