Hold the Anchovies

Just when you think El Nin~o cannot effect you in one more way, consider the little-noted anchovy-tofu connection and how it’s upending the normal workings of the food chain.

Listen closely: The warm ocean currents and thunderstorms in the dry regions of South America that have wreaked havoc on the Peruvian anchovy harvest prompted the government there to close down anchovy fishing for three months to ensure that enough fish survive. (Fishing legally resumed Jan. 28.)

Anchovies are a common ingredient in livestock feed--fish meal is a high and efficient protein source--so the agricultural futures markets felt the effect. Traders bid up the prices for substitute ingredients such as soybeans ($9 per pound in July, down to $7.30 in January, compared with $6.60 in 1996). As a result, the cost of soybean products such as tofu and soy sauce will gradually increase.

If this sounds like deja vu, that’s because it is. In the 1972-73 El Nin~o year, the U.S. and China were the only large growers of soybeans, and when Peru’s anchovies took a dive, soybean meal skyrocketed. An American embargo ensued, and Japan invested heavily in South American soybean fields, easing the prospect of a worldwide crisis.

So this El Nin~o season, the little fish and the soybeans and global livestock and tofu are “connected but not in crisis,” assures Jerry Gidel, an analyst at the Chicago-based agricultural research firm Hartfield Trading Partners, which issues the Hightower Report.

“People generally watch beef prices carefully,” Gidel says. “It’s not until their steak starts doubling in price that they start screaming, ‘What’s going on?!!’ Few people consider the layers of the food chain that go below it.”

So vegetarians need not panic, yet.